Greg,

A short summary of the proposed modes of cooperation with Prediction Company.

I. Projects (in the order they suggested it).

	1. Prediction Company develops a P&L attribution system (allocation of P&L to different market
	factors, like spreads, volume, trader's skills, etc.). Trader's performance evaluation system.

	2. Decision support system: a model recommending transactions to a trader without
	full trade automation.

	3. Fully automated trading system, setting prices and executing trades on an electronic trading platform.
 
II. Financial arrangements. Combination of a number of different forms of equity participation, direct payments 
   per project on completion, and   fees per transaction.

	1. Equity investment would reduce fees and payments. For Prediction Company, this is a preferred form of 
	    Enron's participation.

	2. Payment per project would look like consulting fees.

	3. Next to equity investment, they would like to see a constant income stream through
	    fees charged per transaction. My comment: in case they design a decision support
	    tool, it will be difficult to come up with a per transaction fee. It will be difficult to identify
	    decisions that can be attributed exclusively to their system.


Recommendations:

	1. A visit to Santa Fe with Kevin Garland to discuss an equity investment.

	2. I shall try to dig up more information about the company and the relationship
                with UBS.

	3. We should  come up with a solution that will help to transfer skills to Enron from
	    Prediction Company.