Mark the position is relatively straight forward. Enron Australia Finance 
Pty.Ltd.(EAF) trades Australian Power Derivatives under what is known as an 
exempt market declaration (safe harbour provision). There are a number of 
requirements to be met under this Declaration including a list 
"qualifications" of the persons who can enter into a transaction. The only 
qualification likely to apply to a non- Australian resident is if  a party 
registered under the Declaration (such as EAF) reasonably believes  that the 
entity has tangible assets with a market value of at least AUD10M (USD6M). 

What happens if we contract with someone who does not have this asset level 
and none of the other tests apply? In all likelihood nothing. However, the 
Australian Regulator (ASIC) would expect EAF to have procedures in place 
aimed at compliance with the provisions of the Declaration. We are required 
to report annually on these procedures. We are also currently in discussions 
with ASIC aimed at extending our Declaration to all products traded through 
EOL in Australia. This is to ensure we are prepared should legislative 
changes eventuate next year requiring trading in all derivatives to be 
licenced. Any suggestion that we do not have procedures in place to ensure 
compliance with the intent of our current declaration would be of extreme 
concern to ASIC. They placed particular emphasis on our assurances that we 
are not going to be entering the "retail" market and will have procedures to 
ensure this occurs. 

In essence what am saying is that we need to be able to point to procedures 
to show we are taking reasonable steps to ensure that our counterparties meet 
the qualifications to trade power derivatives.  My concern is not with  
Australian companies - there are a number of tests that apply to them apart 
from just asset level.  Also we can handle them from here.But when a company 
appears on Tana's list that is say incorporated in the US and does not trade 
in Australia there seems no way of checking unless some assessment is  made 
of its asset level. I thought this was being done as per procedures developed 
(see procedures attached to following email).  

Rather than bounce emails between us can we arrange a brief phone discussion 
on this point?   
                               


From: Mark Taylor@ECT on 18-08-2000 11:25 CDT
To: David Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Tana Jones/HOU/ECT@ECT 

Subject: EnronOnline access to Australian Power products

Thanks for dealing with Tana on these issues.  It is not entirely clear to me 
what you want the policy to be regarding which counterparties have access to 
Australian power products.  You probably already know that the EnronOnline 
people want every counterparty everywhere in the world to have access to 
every product unless Credit or Legal can justify restricting their access.  
Credit already performs a financial test on each counterparty to determine if 
they meet the CFTC Eligible Swap Participant requirements.  Unfortunately, 
that test is not as restrictive as the Australian tangible assets test.  It 
sounds like there should be a US$6 million tangible assets test applied by 
Credit before we give any counterparty access to Australian Power (this would 
be a total pain but certainly possible).  On the other hand, if you feel 
comfortable giving access to non-Australian counterparties  without that test 
being performed, we can do that, too.  Pleas let me know if we should ask 
Credit to start performing this test on all counterparties or if it should be 
limited to Australian entities.