ISDA PRESS REPORT - MAY 15, 2001

* Japan Must Speed Up Power Sector Deregulation to Lower Rates - Dow
Jones
* Single-Stock Futures Offer, The Promise of Fat Profits - Wall Street
Journal
* Goldman Sachs Names Japan Co-Presidents - Asian Wall Street Journal
* Gary Schieneman Named to FASB - BNA


Japan Must Speed Up Power Sector Deregulation to Lower Rates
Dow Jones Newswires - May 15, 2001
By Maki Aoto

TOKYO -- Japan should accelerate the ongoing electric power sector
deregulation to fully liberalize the retail market, in order to bring down
the country's high power rates while ensuring stable power supply, experts
said at an industry seminar Tuesday. The pressure is mounting for Japan's 10
power utilities, which have long enjoyed regional monopolies until a year
ago, to become cost- effective and performance-conscious after the
government partially liberalized the retail power market in March 2000.

However, the current scheme has so far failed to lure a large number of
potential entrants because of the high transmission fees they must pay to
conventional power companies.
"What happened in overseas (power industries) suggest that the
liberalization in Japan wouldn't only lower power rates but would also
contribute to stable power supply significantly," said Tatsuo Hatta,
professor of economics at the University of Tokyo.

Compared with the U.S., Japanese electricity charges are typically twice as
much for households and three times higher for industrial users.  "There is
a large discrepancy (in rates), and that is why we should hurriedly
implement the liberalization," Hatta said.

He said Japan's steep seasonal peak-load curve - one of the reasons the
power companies cite as the cause of high power rates in Japan - can be
altered once the prices are liberalized. "If power rates are set higher
during those peak hours following the liberalization, users would refrain
from using electricity."

Steven Kean, executive vice president of the U.S. energy major, Enron Corp.
(ENE), told the same seminar that Japan's power costs remain on the upward
trend despite cost reductions in Europe and the U.S.

He said Japan could achieve a cost-saving of Y4 trillion a year if its power
prices fall to levels in Organization for Economic Cooperation and
Development countries following the liberalization.
Hatta and Kean were speaking at the seminar called "Reassessing Power
Deregulation," which was co-sponsored by the Houston-based Enron.

Hatta of the University of Tokyo said "it's very wise" that Japan has begun
the deregulation with the "bilateral supply, or trade" system under which
suppliers and users clinch deals directly.
Under the current reforms, the sector for high-volume, large-lot industrial
and commercial users - which represents only 30% of the Y15 trillion market
- is opened to free competition. The government is to review the partial
deregulation by 2003 for further deregulation.

Japan should then introduce spot electricity trading such as futures and
derivatives to alleviate risks of complicated price volatility for power
providers, Hatta said.  Hatta and other experts attending the seminar said
further deregulation should destroy the systems that have supported the
country's high power rates - regional monopolies and the fair rate return
method, under which all costs are levied on prices.

"There is absolutely no need to set the same (power) prices" nationwide,
Hatta said. Power companies should make the opaque transmission fees
transparent and set them accordingly with regional demand, he said.

Yoshinori Omuro, vice president of Takashimaya Co.'s (J.TKA or 8233)
management department, acknowledged the slow progress of the deregulation.
Takashimaya, a major department store operator, has shifted to Diamond Power
Corp., a wholly-owned subsidiary of Mitsubishi Corp. (J.MIB or 8058) as its
power supplier at two of its 18 stores, with "strong back-up" from the
Ministry of Economy, Trade and Industry. "Despite the deregulation, the
situation isn't where we can negotiate with power utilities to reduce
(electricity costs). We have no choice but select independent power
providers," Omuro said.

Single-Stock Futures Offer - The Promise of Fat Profits
The Wall Street Journal  - May 15, 2001
By Peter A. Mckay and Kopin Tan

The concept of single-stock futures, which most U.S. financial exchanges
hope will be a cash cow, already has done the near-impossible: It got the
major Chicago exchanges to agree on something.

Monday, Chicago's three major futures and options exchanges said they will
jointly form a market for single-stock futures, a type of contract already
available in Europe that was recently approved by U.S. regulators. These
hybrid investing vehicles resemble stock options but allow investors to do
more, including having more freedom in betting against a stock.

The venture announced Monday represents a rare instance of cooperation among
usually heated local rivals -- the Chicago Board Options Exchange, Chicago
Mercantile Exchange and Chicago Board of Trade. The CBOE and CME each will
have a 45% stake in the new online exchange, while the Board of Trade will
have a 10% share, market executives said.

The Chicago exchange chiefs said their joint venture will be running by
August, when federal regulators are due to hammer out their final rules for
firms to trade single-stock futures. Individual investors will get access to
them by December under a separate set of standards.
The competition among exchanges is expected to be fierce, since the new
futures have unique crossover appeal among options, stock and futures
markets that rarely compete for the same products. Indeed, Monday's
announcement was considered just another in a string of several to come as
markets try to tap into one another's expertise to beat other competitors.

"From talking to our customers, they told us they wanted to use single-stock
futures to hedge their options positions," said Chicago Mercantile Exchange
Chairman Scott Gordon. "Once we heard that, it was pretty clear we should
talk to CBOE."

The Nasdaq Stock Market and the London International Financial Futures &
Options Exchange previously announced a similar deal.
Single-stock futures will be contracts pegged to a company's shares, settled
at a predetermined delivery date either by cash or delivery of shares. That
makes them different from options, which have been used since the 1970s and
convey the right, but not the obligation, to buy or sell stock.
In the Chicago deal, the Board of Trade was brought in toward the end of the
other two partners' initial talks. Officials from all sides acknowledged the
first two exchanges had the most natural alliance because of the CBOE's
expertise listing options pegged to individual stocks and the CME's success
in offering stock-index futures, particularly those pegged to Standard &
Poor's indexes.

The as-yet-unnamed joint venture will be a for-profit company with its own
management and board and will be structured separately as a regulated
exchange. Its single-stock futures will be traded electronically, with
orders entered through both CBOEDirect, a screen-based trading platform the
CBOE is preparing to launch later this year, and the CME's Globex2
electronic-trading system.

Dave Vitale, chief executive officer of the Board of Trade, said his
exchange also will try to persuade Eurex, a giant German-Swiss derivatives
market with which CBOT has an online alliance, to list the single-stock
futures on that platform. A CBOT spokesman said the exchange recently
contacted Eurex about the new joint venture, but hadn't received a response.

It also remains to be seen whether the new exchange's futures will be
"fungible," a securities-industry term referring to the common settlement of
securities, or the ability for investors to open positions at one market and
close them at another. Fungibility usually isn't a factor in the futures
business, and any decision to launch a nonfungible product will be an
intriguing litmus test as other exchanges prepare to trade single-stock
futures.

William Brodsky, chairman of the CBOE, said the exchanges are still ironing
out details of the proposed product, including fungibility.  While the law
doesn't require single-stock futures to be fungible, and the Securities and
Exchange Commission has indicated it won't force fungibility on exchanges,
other hurdles remain. Among them, whether Options Clearing Corp., which
clears options contracts and is owned jointly by the five major U.S. option
exchanges, will honor nonfungible contracts exclusive to one of the
exchanges.  If the new exchange opts to make the futures nonfungible, the
ability to trade easily will be a concern among investors and customers,
said partners at several option-trading firms.

Goldman Sachs Names Japan Co-Presidents
The Asian Wall Street Journal - May 15, 2001

Goldman Sachs Group Inc. promoted its head of Japanese investment banking
and its Asian fixed-income chief to be co-presidents of the firm's Tokyo
operations. Masanori Mochida, 46 years old, who runs the investment banking
division in Japan, and Thomas Montag, 44 years old, who heads the Asian
fixed income, currency and commodities businesses for Goldman, will replace
Mark Schwartz at the helm of the firm's Japanese operations. The move makes
Goldman one of the only foreign firms in Tokyo with a Japanese executive
running the day-to-day operations.

Mr. Schwartz was also chairman of Goldman's businesses across Asia, a
position that will disappear after he leaves the firm at the end of June.
Instead, the region will be split in two. Richard Gnodde, who is president
of the Asian businesses outside Japan, will retain that post.
Amid the reshuffle, Goldman's Asian operation is losing its representation
on the firm's global management committee. Mr. Schwartz, who is retiring
after 22 years at Goldman, was a member of the investment bank's 15-member
policy-making body. None of his successors are as senior in the firm.


Gary Schieneman Named to FASB Replacing Cope in Security Analyst Seat
BNA - May 15, 2001
By Steve Burkholder

NORWALK, Conn. --Gary Schieneman, a veteran analyst overseeing Merrill Lynch
& Co.'s international stock studies, was named to a two-year term as a
member of the Financial Accounting Standards Board, the board's parent group
said May 14.

The Financial Accounting Foundation said Schieneman plans to join the board
July 1 and will serve out the remainder of the term of Anthony Cope, who
left the board in late March to join the newly restructured International
Accounting Standards Board.

Schieneman, director of comparative global equity analysis at Merrill Lynch,
will occupy a seat on FASB that has been set aside for a security analyst.
After his two-year term is completed, he would be expected to be eligible
for a full five-year term at the accounting board.

Because FASB members can serve a maximum of 10 years--normally two five-year
terms--on the panel, Schieneman then would be eligible for a second term of
three years, a spokeswoman told BNA.

Period of Transition for FASB

This summer will be a period of significant transition for the seven-member
FASB. Along with Schieneman, two other new members join the panel: in July,
John Wulff, formerly chief financial officer at Union Carbide; and in
September, Katherine Schipper, a professor of accounting at Duke University
who also has taught at the University of Chicago.

Wulff will replace Gaylen Larson, taking a seat that has been occupied by a
person who has worked as a corporate financial executive. Schipper, who
replaces Gary Mueller, is to assume the chair informally reserved for an
accounting academic.

Major decisions of FASB require at least five members to vote together as a
supermajority. As the board currently is operating with only six members, it
plans to wrap up significant decision-making in its high-priority business
combinations project by June 30, when Larson and Mueller leave the panel.

Schieneman Brings International Experience

Since 1995, Schieneman has directed Merrill Lynch's work in global
accounting, financial reporting, and related issues that affect
international investments, according to a news release issued by the FAF.
From 1990 to 1995, he was a vice president at Smith New Court, where he
headed Latin American research and strategy. Previously, he worked at
Prudential-Bache Securities as a vice president for international equity
research, according to the FAF release.
Schieneman began his accounting career as an auditor for what is now known
as PricewaterhouseCoopers, for which he worked in Paris for a year, FAF said
in the release. He also served as an assistant controller for the European
operations of Mobil Corp., working in London.


**End of ISDA Press Report for May 15, 2001. **

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