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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