Hadn't really thought about that.  In each contract, counterparty reps and 
warrants that it physically handles each commodity on which an option is 
traded (tracking "trade option" regulatory language), and all r&w's are 
deemed repeated each time a new transaction is entered into.  

The law requires that on offeror have a "reasonable basis" to believe that 
offeree is physically handling, so traders/marketers in the ag area must be 
trained to not ignore obvious indications that an ag counterparty is no 
longer in the business of physically moving a given ag commodity.  Such 
indications should be reported to legal department.

This will be of heightened concern in the ag area.  With other commodities, 
if the counterparty doesn't handle, or stops handling the commodity, we can 
always argue that we are the "offeree" and we are physically handling.  Until 
we are physically handling ag commodities, though, we will always have to 
rely on the counterparty being a physical merchant in order to trade options  


Robert E. Bruce
Senior Counsel
Enron North America Corp.
T (713) 345-7780
F (713) 646-3393
robert.bruce@enron.com



	Mark.E.Haedicke@enron.com
	10/20/2000 03:15 PM
		 
		 To: Robert.Bruce@enron.com
		 cc: 
		 Subject: Re:



It looks good to me.  How do we keep up with changes in a counterparty's
business?  What if it no longer physically handles a particular commodity?
Mark



                    Robert
                    Bruce@ENRON          To:     Mark E Haedicke/HOU/ECT@ECT
                    Sent by:             cc:     Mark Taylor/HOU/ECT@ECT
                    Robert               Subject:
                    Bruce@ENRON


                    10/17/2000
                    06:21 PM





per my voice message to you; have tried to make memo brief

(See attached file: Haedicke et al 101700.doc)


Robert E. Bruce
Senior Counsel
Enron North America Corp.
T (713) 345-7780
F (713) 646-3393
robert.bruce@enron.com


 - Haedicke et al 101700.doc