Fascinating.

A few questions come to mind:

1) Has an auction transaction agreement been developed? 

2) Harry, have we checked with Mark Perlis yet on any emission legal issues, 
such as can we offer an auction that competes arguable with the EPA Auction?

3) It appears as though this is going to be both a system that allows Enron 
to buy and sell with other participants, as well as allows others to deal 
with each other through the system.  I would be my understanding that only 
physical delivery would occur in this market. Mark, do you think this 
(particularly the matching aspects of the auction) may be construed as a 
"multilateral execution facility" by the CFTC? I could not recall if that 
interpretation would be a problem for a physical delivery market; I know it 
would likely be for swaps.

4) Does Enron get any commission for playing running the system when others 
transaction without Enron being a principal?

5) I have no idea about the legality of offering up the Las Vegas trip. But, 
it seems as though we would need to review all relevant jurisdictions where 
the participants reside for an answer.

Alan






Harry M Collins
02/15/2000 12:22 PM
To: Mark Taylor/HOU/ECT@ECT
cc: Alan Aronowitz/HOU/ECT@ECT 
Subject: Auction

FYI

Attached is the preliminary outline of the proposed emissions auction, 
developed by Zal..

Please advise on the CFTC issues raised.

Thanks,
---------------------- Forwarded by Harry M Collins/HOU/ECT on 02/15/2000 
12:19 PM ---------------------------


Zal Masani
02/14/2000 03:55 PM
To: Harry M Collins/HOU/ECT@ECT
cc: James B Fallon/HOU/ECT@ECT, Greg Woulfe/HOU/ECT@ECT, Leonard 
Tham/HOU/ECT@ECT, Doug Gilbert Smith/Corp/Enron@ENRON 
Subject: Auction

Harry:

Attatched is a document containg the basic structure of the auction as we 
envision it. Please keep in mind that it is a work in progress and will be 
modified as we develop a better idea of the auction.
Below are certain questions we need clarification on.

Structure:
Do we have any CFTC exposure?
By the nature of the auction structure, are we not implicitly matching? If 
yes then how does this affect the previous answer?
Do we have exposure to the lottery commission if we offer a free gift during 
the auction?

Contract:
To limit our exposure due to failure of the system etc. what sort of Force 
Majure clause can we incorporate in the contract?
To what extent are electronically signed contracts enforceable?

Internal:
Can other trading desks at Enron other than the emissions desk participate in 
this auction?
What limitations can be placed on the emissions desk as far as information 
sharing and usage are concerned? both during and after the auction?


Thank You

Zal