Subject: Enron Entity for Financial Trading
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Thu, 4 Nov 1999 03:17:00 -0800 (PST)

Lucy:

Tana tells me you are looking for some guidance as to which Enron entity 
should be used for booking trading transactions with various counterparties.  
There are a couple of general rules that apply to "normal" trading 
circumstances and I'll spell them out below, but remember that these are not 
hard and fast rules and may go straight out the window when circumstances 
vary (even just a little bit) from "normal."  For example, abnormal 
situations exist where the trading transaction is in connection with another 
transaction with an Enron company (e.g. a financing or equity investment), 
the counterparty has a legally justifiable desire to trade with a certain 
Enron company, the product being traded is only traded by a particular Enron 
company or the counterparty is in a jurisdiction outside the country where we 
are trading (except as spelled out below).  Having said all that, the 
following rules (generally tax driven) can be used as general guidelines:

1. If there is no master agreement in place between the counterparty and an 
Enron company, the trade should be entered into on behalf of the Enron 
company based in the country where the Enron trader is when the trade is 
concluded and, if there is any hope of further trading with the counterparty, 
Credit and Legal should be notified to negotiate a master agreement.  Of 
course, if the counterparty is outside the country where we are trading, 
Legal should be consulted ahead of time (there are some countries where 
derivatives are actually illegal, special procedures must be followed or 
can't be done by us from the U.S.).

2. If there is a master agreement between the counterparty and either ENA or 
Enron Canada, and the Enron trader is in the U.S. or Canada, the trade should 
be entered into by the trader on behalf of the Enron company that is party to 
the master agreement.  If the trader is outside of the U.S. or Canada, other 
rules may apply.  

3. If there is a master agreement between the counterparty and ECT 
International (usually only European counterparties), and the Enron trader is 
in the U.S. or the U.K., the trade should be entered into by the trader on 
behalf of ECT International.  Note that there are special considerations if 
the trader is in the U.K. based on U.K. regulatory issues (the trade is 
actually "arranged" by Enron Europe Finance and Trading Ltd. on behalf of ECT 
International).  If such a master exists but the trader is not in the U.S. or 
U.K., the trade should be handed off to a trader located in one of those two 
countries for final negotiation and execution.  It would be a good idea to 
consult with Legal or Tax if this comes up for more specific advice.  

These general rules relate to which Enron entity should be the legal 
counterparty to the transactions.  This doesn't determine where within the 
Enron family the actual risk should ultimately reside.  If we want the risk 
to be in an Enron company other than the Enron counterparty for contractual 
purposes, an intercompany transaction should be booked (probably through RMT) 
to get the risk in the right place.