Message-ID: <11188715.1075844788060.JavaMail.evans@thyme>
Date: Thu, 31 May 2001 12:49:00 -0700 (PDT)
From: andrea.calo@enron.com
To: michael.guerriero@enron.com, remi.collonges@enron.com, john.novak@enron.com, 
	patrick.hansen@enron.com, julian.poole@enron.com, 
	rodolfo.freyre@enron.com
Subject: Argentina closer to having its derivative market
Cc: sara.shackleton@enron.com, lynn.aven@enron.com, brent.hendry@enron.com, 
	mary.kimball@enron.com, paul.radous@enron.com, jody.pierce@enron.com
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X-From: Andrea Calo
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The Argentine House of Representatives is currently analyzing a bill passed 
by the Senate in Nov. 2000  that would amend the existing Bankruptcy Law No 
24.522, specifically providing  for early termination and netting of 
derivative transactions in the event of insolvency proceedings and 
bankruptcy.  Judging from the speed at which this paper is moving, it is 
likely to get passed sooner than expected.

The highlights are:

Insolvency Proceeding:
*Condition:  Existence of a Master Agreement (MA) between the parties.

*Transactions to be considered: All derivative transactions between the 
parties under the MA.

* Effects:  (a)  The solvent party may elect to exercise its right to early 
terminate the MA, and would be able to net all transactions between the 
parties.

    (b) Upon approval by the judge, (prior approval by trustee), the MA may 
continue in effect allowing the solvent party to demand  payment of all       
obligations pending  on the date the of the filing of the proceeding.  

* Cherry-picking: Under this structure, the insolvency proceeding trustee  
would no longer be able to cherry-pick the contracts that may continue in 
force, since all derivative transactions under a MA would be deemed as a 
single contract between the parties.

Bankruptcy:
*Condition:  Existence of a MA between the parties.

*Transactions to be considered: All derivative transactions between the 
parties under the MA.

*Termination: If specifically provided for under the MA, the solvent party 
may exercise its right to early terminate all derivative transactions under 
the MA and net the positions pursuant to the procedure set forth under the 
contract.

*Guarantees: Would be foreclosed against the net balance on the date of 
termination.

*Derivatives contracts: The Central Bank would issue a list of qualifying 
derivative contracts comprised under  the law.  

* Applicable Law and jurisdiction would be Argentine in both cases.

I will keep you informed of any new events.  Please feel free to contact me 
if you have any questions.

Regards,

Andrea