Subject: enron metals fx status
sally / brent
fyi - no action required
this note and an earlier email ( forwarded separately ) highlights issues
around some transactions originated within metals that arose due to
' misunderstanding ' of limits - which was work in progress for andrew
cornfield ( risk ) , lloyd fleming ( rac ) and shane dallman ( fx desk -
reporting to gary hickerson ) working with the metal commercial mds on the
subject of an exemption from corp policy for ir and fx hedging .
it is pleasing that people in the control environment picked up the issues on
a timely basis but disappointing that a firm conclusion between the
commerical groups on ' delegated ' limits took longer than anticipated .
if you need any detail please call
mike
- - - - - - - - - - - - - - - - - - - - - - forwarded by mike jordan / lon / ect on 23 / 11 / 2000 12 : 28
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from : lloyd fleming 23 / 11 / 2000 11 : 58
to : rick buy / hou / ect @ ect , michael r brown / lon / ect @ ect , michael j
hutchinson / eu / enron @ enron
cc : ted murphy , david port , gary hickerson / hou / ect @ ect , mike
jordan / lon / ect @ ect , andrew cornfield / lon / ect @ ect , tim r jones / eu / enron @ enron ,
shane dallmann / lon / ect @ ect , robert soeldner / lon / ect @ ect
subject : enron metals fx status
the following issues have been resolved today following discussions with
metals commercial , risk management and rac :
5 m euro prop trade : it has been agreed that this will be closed out
immediately . metals traders will be advised that fx exposure may only be
generated as part of a hedge position to an underlying metal trade , and that
any fx exposure must be laid off via roger murray - evans ( metals fx trader )
and the global markets desk .
averaging trades ( fx and bullion ) : change method of booking trades so that
the averaging leg of all trades is booked as it arises ( i . e . daily ) and the
resulting fx exposure is captured daily and laid off with global markets as
part of the metals aggregation .
a number of other matters , which have been under discussion for some time ,
were also agreed : -
euro / ali option : currently operates under a $ 30 m fx limit and is managed
by tim jones . it has been agreed that this limit will be reduced to $ 20 m
( emrac to approve ) and be a part of gary hickerson ' s limit . as the options
expire , the limit will be progressively reduced . the limit applies only to
this transaction and does not cover any other fx dealing by enron metals .
any subsequent transactions of this nature will be covered under separately
proposed limits .
overnight exposure : enron metals to apply for a small overnight limit to
cover trades booked after the end of day cut - off . $ 2 m total net open
position has been proposed , to be agreed with gary hickerson and form part of
his limits .
fx position management : fx exposure generated through the day to be
aggregated and passed to the global markets desk .
regards
lloyd fleming
rac market risk management
ph : + 44 20 7783 4532
mobile : + 44 7760 17 87 42