Message-ID: <30129250.1075851772435.JavaMail.evans@thyme> Date: Mon, 11 Dec 2000 03:00:00 -0800 (PST) From: darron.giron@enron.com To: jason.wolfe@enron.com, anne.bike@enron.com, chris.walker@enron.com, carole.frank@enron.com, jennifer.bagwell@enron.com Subject: How do officialized books make it to credit? Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Darron C Giron X-To: Jason Wolfe, Anne Bike, Chris Walker, Carole Frank, Jennifer Bagwell X-cc: X-bcc: X-Folder: \Jason_Wolfe_Nov2001\Notes Folders\Saved-12 X-Origin: WOLFE-J X-FileName: jwolfe.nsf Please read. Thanks. DG ---------------------- Forwarded by Darron C Giron/HOU/ECT on 12/11/2000 10:59 AM --------------------------- Jeffrey C Gossett 12/11/2000 10:35 AM To: Kam Keiser/HOU/ECT@ECT, Darron C Giron/HOU/ECT@ECT, William Kelly/HOU/ECT@ECT, David Baumbach/HOU/ECT@ECT, Errol McLaughlin/Corp/Enron@ENRON cc: Subject: How do officialized books make it to credit? Please forward this to your groups. Thanks. ---------------------- Forwarded by Jeffrey C Gossett/HOU/ECT on 12/11/2000 10:38 AM --------------------------- From: Shona Wilson@ENRON on 12/11/2000 10:35 AM To: Bob M Hall/NA/Enron@Enron, Leslie Reeves/HOU/ECT@ECT, Jeffrey C Gossett/HOU/ECT@ECT, Peggy Hedstrom/CAL/ECT@ECT, Kathy Reeves/CAL/ECT@ECT, Stacey W White/HOU/ECT@ECT, Monica Lande/PDX/ECT@ECT, David Maxwell/HOU/ECT@ECT, Martha Stevens/HOU/ECT@ECT, Scott Mills/HOU/ECT@ECT, Scott Earnest/HOU/ECT@ECT, Michelle Bruce/HOU/ECT@ECT, Sheila Glover/HOU/ECT@ECT, D Todd Hall/HOU/ECT@ECT, Brenda F Herod/HOU/ECT@ECT, Michael E Moscoso/HOU/ECT@ECT, Kristin Albrecht/Enron Communications@Enron Communications, Gary Stadler/Enron Communications@Enron Communications, Meredith M Eggleston/HOU/EES@EES, James New/LON/ECT@ECT, Heidi Mason/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jan-Erland Bekeng/AP/Enron@Enron, Jay Knoblauh/HOU/ECT@ECT cc: Sally Beck/HOU/ECT@ECT, Brent A Price/HOU/ECT@ECT, Mike Jordan/LON/ECT@ECT, Chris Abel/HOU/ECT@ECT, Kenneth Thibodeaux/NA/Enron@ENRON, Michael Benien/Corp/Enron@ENRON, Burton McIntyre/HOU/ECT@ECT, Susan D Trevino/HOU/ECT@ECT, Nancy Hernandez/NA/Enron@ENRON, Debbie R Brackett/HOU/ECT@ECT, John D Powell/HOU/ECT@ECT, Ganapathy Ramesh/HOU/ECT@ECT, Joel Henenberg/NA/Enron@Enron, Matt A Brown/HOU/ECT@ECT Subject: How do officialized books make it to credit? In the past few months much focus has been put on understanding VAR and how it is calculated (through RisktRAC). However, everyone should note that the credit department also receives our information. Market risk and credit risk are inherently different, with different requirements. This memo serves as a reminder of what some of the key differences are, how the credit system uses RisktRAC differently from market risk, how this affects us, what some key problems are in the credit system caused by our data, and changes to be made by risk management groups. differences are between credit and market risk - you all know this, but many of your ba's don't. when a book is flat it still has an effect on credit. Flat books must be officialized market risk is keyed off positions and curves. When we make money, market risk is reduced. Credit risk is keyed off positions with customers. When we make money, credit risk is increased, as people owe us more money. how the credit system uses RisktRAC differently from market risk Market risk picks up all officialized books. If a book is not officialized it does not pick the book up. Credit picks up all officalized books. If a book is not officialized, it picks up the previous day's position. Therefore, if positions in book A are moved to book B, and A is no longer officialized, credit picks up the previous day's position for book A. As a result, if a book is no longer used, please officialize it the first day it is no longer used, so credit will pick up 0 on a go forward basis. Market risk is not concerned with counterparty codes and names. Credit needs correct counterparty codes and names. In recent months, the counterparty information has deteriorated. Enron official counterparty names need to be used so they flow properly to credit. what are some key problems in the credit system caused by our data As referenced above: correct counterparty names and books with 0 positions not being officialized so credit picks up previous day info. As a takeaway from this message please ensure only correct counterparty names are used and that if a book has 0 positions that it is officialized the first day it has 0 positions. If you have specific questions about credit, please call Debbie Brackett, at X35856.