Steve:

ICE's execution engine is quasi-regulated by the CFTC as an "exempt commercial market" since they are a many-to-many platform.  We are comfortable that we can convince the CFTC that our new function (enhanced limit order)does not change our status as a one-to-many platform.  

ICE is a regulated clearing entity.  Although the clearing function that EOL will be providing is quite similar to the clearing function provided by ICE, it is a minor activity performed by our platform.  Moreover, we are still a counterparty to every transaction - which is not the case with ICE.

Also, I wanted to let you know that Mark Taylor instructed Ken Raisler (our outside CFTC counsel) to notify the CFTC that we will be offering enhanced limit orders.   Ken has done so (by phone).

I hope this helps to clarify the distinctions between EOL and ICE.  Let me know if you need further information.

Lisa

-----Original Message-----
From: skean@enron.com [mailto:skean@enron.com]
Sent: Thursday, August 30, 2001 3:08 PM
To: Yoho, Lisa
Subject: Global-Energy: ICE to Offer Clearing for Oil, NatGas 


Does this present the same regulatory issue we were facing with EOL?


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Global-Energy: ICE to Offer Clearing for Oil, NatGas 

Online commodities trading market IntercontinentalExchange (ICE) announced on 29 August that the London Clearing House (LCH) would provide clearing services for over-the-counter transactions of WTI crude and Henry Hub natural gas once the Commodity Futures Trading Commission grants regulatory approval, which is not expected before October.  LCH was the clearing house for International Petroleum Exchange (IPE), which ICE recently bought.  Jeff Sprecher, ICE Chief Executive, said the clearing services could "open up new trading opportunities, increase the velocity of trading, and increase companies' ability to take on new risk," according to Reuters.  A broker told Dow Jones that the move by ICE was "the 'shot fired across the bow' of its larger-volume competitor NYMEX...[and] will allow ICE and IPE to compete directly with NYMEX for Brent-WTI arbitrage business," as NYMEX will begin offering Brent crude contracts on 5 September.  NYMEX also intends to launch its online trading system, eNYMEX, within four to eight months.  <font color="#0084A5">ANALYSIS:  Any trading market lives or dies on the quality of its clearance processes.  ICE, as one of the largest electronic trading forums, is under constant pressure to offer new services, as it attempts to pull potential traders from other online ventures and traditional floor exchanges.  CEO Sprecher said ICE's goal was to "plug into (the already existing futures market) infrastructure and develop a new paradigm for the OTC markets on some way of clearing, settling or netting," according to <i>Platts</i>.  NYMEX's electronic trading efforts are consistently delayed.</font>




Best Links: http://www.inctx.com
Other Links: Reuters, International Petroleum Exchange, Energy Argus, Platts

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