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To: LLCF who wrote (170271)	6/4/2002 11:09:27 PM
From: Roads End	Read Replies (1) \| Respond to of 436258

The juice is the two new acquisitions. Lots of room for accounting games there.

To: LLCF who wrote (170271)	6/5/2002 4:02:34 AM
From: maceng2	Read Replies (1) \| Respond to of 436258

You can make money from success, you can also make it from disaster - a quote from one of my old bosses. news.ft.com Nymex boosted by Enron backlash By Mary Chung in New York Published: May 31 2002 0:46 \| Last Updated: May 31 2002 0:46 The New York Mercantile Exchange, the world's largest energy futures exchange, is fast becoming the main beneficiary of the controversy that has dogged energy trading since the collapse of Enron. Nymex trading volumes have risen 35 per cent since November, shortly before Enron filed for bankruptcy. Volume is continuing to grow amid disclosures from major energy traders including Dynegy, Reliant Resources and CMS Energy, of sham trading activities to boost volumes and accounting irregularities. Once the biggest energy trader, Enron owed its phenomenal growth over the past decade largely to the anonymous and bilateral character of the over-the-counter trade. The company lobbied hard for this activity to be lightly regulated, if at all. These transactions, conducted directly between companies, by their nature are difficult to regulate and the lack of transparency has plagued companies' shares in recent months. As a result, energy traders have come under pressure to make their activity more visible - hence the benefit of a third-party exchange which demands parties put up collateral. The added attraction of the Nymex is that it clears trades and assumes the financial risk for the buyer and seller. Credit problems facing energy merchants have attracted new customers to the exchange, boosting the value of a Nymex seat to a record $1m this month. The New York exchange will have an opportunity to win even more customers with the launch today of OTC clearing services for 25 of the most commonly traded energy contracts. Robert Collins, Nymex president, said: "Recent events in the energy markets have once again brought to the fore the urgency of mitigating counterparty risk for OTC transactions. "The exchange has a strong well-capitalised clearing organisation, which is geared up to guarantee against default to market participants." It is understood more than 70 companies have already signed to use Nymex's OTC clearing vehicle. Speculation is that the list includes major investment banks, energy merchants and oil giants, including Goldman Sachs, BP and Shell. The increasing credit risks associated with doing business through individual energy trading platforms has sparked an exodus from the unregulated OTC market for the haven of Nymex, which assumes the risks of both the buyer and seller and is regulated by the Commodity Futures Trading Commission. "People are looking at us as a flight to quality," says Mr Collins. "We give customers the benefit of transparency, efficient accounting and credit quality because we do your books for you on a daily basis and margin for both you and your counterparty." At Nymex, the buyer and seller must settle their positions daily with the transactions administered by the New York exchange. If a position goes against a customer, the customer is required to send money in for a margin call. Customers using energy trading companies typically settle their positions at the conclusion of the deal, which could be months away and there are no margin calls. When the settlement day arrives, the parties either send a cheque or receive payment on their position. However, with energy trading companies under investigation for inflating balance sheets and bogus trading schemes, there is concern among customers that when the settlement day comes to pay up, there will be nobody on the other side to cover the risk.