Does the proposed reorg now contemplate that a US entity will act as 
principal for financial transactions?




Paul Simons
05/25/99 05:07 AM
To: ECT London European Trading
cc:  
Subject: UK Financial Services Regulation

The FSA (Financial Services Authority) recently published for the first time 
details of the exemptions from regulation which will be available under the 
legislation replacing the current Financial Services Act 1986 (the "Act"). 

As you know, ECTRIC is currently an unregulated booking company for our 
European financial trading business. As such, ECTRIC is not required to 
maintain what would otherwise be significant regulatory capital and is not 
subject to conduct of business rules. ECTRIC's status as an unregulated 
entity rests on exemptions which available under the Act. It is clearly 
important that equivalent exemptions are available to ECTRIC (and to the new 
US booking entity under the proposed reorg) under the replacement 
legislation.

From an initial view, the existing exemptions we rely upon will be available 
under the new regime.  However, the "devil's in the detail" and so I am 
working through the exemptions in detail with Slaughter and May.

Please give me a call on x6566 if you would like to discuss this area.

Paul