RE: Brazilian Conference Call

Thanks Sami. It might be a good idea to try and get the ISDA team to spend a little time on non-financial commodities. It's not clear from this summary that they intend to raise energy commodity derivatives as an issue or attempt to achieve parity of legal treatment with bank products. Just so you know, we have run into this kind of blind spot from local participants (who are mostly banks and investment firms) before but the New York ISDA staff is usually willing to help us out.

-----Original Message-----
From: Arap, Sami
Sent: Friday, September 28, 2001 2:56 PM
To: Collonges, Remi; Rosenberg, David; Gonzalez, Orlando
Cc: Mark Taylor/HOU/ECT@ENRON; Hendry, Brent; Kimball, Mary
Subject: RE: Brazilian Conference Call

FYI
---------------------- Forwarded by Sami Arap/SA/Enron on 09/28/2001 05:04 PM ---------------------------

Lavinia.Junqueira@itau.com.br on 09/28/2001 01:54:00 PM
To: Scott Marra <SMARRA@isda.org<, anibal.fernandez@itau.com.br, genova_diane@jpmorgan.com, jimenez_emilio@jpmorgan.com, KSumme@isda.org, mark.e.headicke@enron.com, marta.alves@itau.com.br, oliveira_rogerio@jpmorgan.com, PMARTINEZ@isda.org, RAinslie@isda.org, ricardo.salaman@gs.com, robert.mancini@gs.com, sami.arap@enron.com, samuel.ramos@gs.com, santos_carlos@jpmorgan.com, yuri.okumura@gs.com
cc:

Subject: RE: Brazilian Conference Call

Dear Sirs,

With regard to ISDA visit to Brazil and as discussed in our conference call
today, we would like to summarize the issues that we believe might be
important to raise with the Brazilian authorities as well as market
participants. We added some additional points as we realized might be
interesting to discuss:

I. ISDA Master Agreement and International Market Practice x Local Masters
and Brazilian Market Practices

a) Differences as to events of default, early termination, suspension of
contracts or valuations, etc. due to differences in market practices -
discussion of contrasts;

b) Definitions of events of default and early termination and reflex in
other local primary market agreements (loans, derivatives) - preparation
for trigger events of credit derivatives.

c) Should the master agreement be recognized by the authorities as an
official way to negotiate derivatives (ie. By creating a special regulatory
treatment, etc.) or should it be used voluntarily by market participants as
currently assumed?

II. ISDA Definitions of local rates, indexes, commodities, securities:
liquidity of local and international derivatives market referenced to
Brazilian financial instruments.

a) Contribution of ISDA to the negotiation of derivatives referenced to
Brazilian instruments.
b) Contribution of the authorities (ie. expansion of the scope to the
negotiation of international hedging derivatives by Brazilian banks and
counterparties).

III. Netting and Banking Credit Bills (c?dulas de cr?dito banc?rio).

a) Instability of Provisional Measure x Contractual Reliability
- power of law x weakness of legislative trust
- stability of contractual relations x change in law

b) Negotiations of legislative approvals

c) Independence of the Brazilian Central Bank and Monetary
Council

Parallel in other legislation x benefits to the market x constraints to the
market

IV. OTC Derivatives x Clearings

a) Should all OTC Derivatives be registered in local clearances as the
authorities require ?

- pros and cos

b) Tax effects and gambling characterization of unregistered contracts ?

V. Discussion of tax deviations that affect the derivatives industry.

a) Financial institutions: non-hedging transactions

b) Non-financial companies: hedging transactions

Feel free to contact us if you need any further explanations !

Regards,

Lavinia

Banco Ita? S/A
International Financial Engineering

lavinia.junqueira@itau.com.br
phone: 55 11 237 3808
fax: 55 11 237 2961

Scott Marra
<SMARRA@isda.o To: Pedro Martinez <PMARTINEZ@isda.org<, Diane
rg< Genova <genova_diane@jpmorgan.com<,
"'jimenez_emilio@jpmorgan.com'"
27/09/2001 <jimenez_emilio@jpmorgan.com<,
17:36 "'santos_carlos@jpmorgan.com'"
<santos_carlos@jpmorgan.com<,
"'oliveira_rogerio@jpmorgan.com'"
<oliveira_rogerio@jpmorgan.com<,
"'marta.alves@itau.com.br'"
<marta.alves@itau.com.br<,
"'anibal.fernandez@itau.com.br'"
<anibal.fernandez@itau.com.br<,
"'lavinia.junqueira@itau.com.br'"
<lavinia.junqueira@itau.com.br<, Bob Mancini
<robert.mancini@gs.com<, "'yuri.okumura@gs.com'"
<yuri.okumura@gs.com<, "'samuel.ramos@gs.com'"
<samuel.ramos@gs.com<, "'ricardo.salaman@gs.com'"
<ricardo.salaman@gs.com<,
"'mark.e.headicke@enron.com'"
<mark.e.headicke@enron.com<,
"'sami.arap@enron.com'" <sami.arap@enron.com<
cc: Ruth Ainslie <RAinslie@isda.org<, Kimberly
Summe <KSumme@isda.org<
Subject: RE: Brazilian Conference Call

Please refer to the dial in details below

CALL DATE: SEP-28-2001 (Friday)
CALL TIME: 11:00 AM EASTERN TIME
USA Toll Free Number: 888-469-2084
USA Toll Number: +1-312-470-7060
PASSCODE: BRAZIL 2001
LEADER: Mr Pedro Martinez

Scott Marra
Administrator for Policy & Media Relations
ISDA
600 Fifth Avenue
Rockefeller Center - 27th floor
New York, NY 10020
Phone: (212) 332-2578
Fax: (212) 332-1212
Email: smarra@isda.org

< -----Original Message-----
< From: Pedro Martinez
< Sent: Thursday, September 27, 2001 10:26 AM
< To: Diane Genova; 'jimenez_emilio@jpmorgan.com';
< 'santos_carlos@jpmorgan.com'; 'oliveira_rogerio@jpmorgan.com';
< 'marta.alves@itau.com.br'; 'anibal.fernandez@itau.com.br';
< 'lavinia.junqueira@itau.com.br'; Bob Mancini; 'yuri.okumura@gs.com';
< 'samuel.ramos@gs.com'; 'ricardo.salaman@gs.com';
< 'mark.e.headicke@enron.com'; 'sami.arap@enron.com'
< Cc: Ruth Ainslie; Scott Marra; Kimberly Summe
< Subject: Brazilian Conference Call
< Importance: High
<
< Dear All,
<
< ISDA would like to schedule a conference call with the Brazilian Advisory
< Group this afternoon or tomorrow Friday, September 28 at 11:00am NY time
< to discuss an ISDA visit to Brazil in late October. ISDA is considering a
< visit of several days that includes the Central Bank as well as other
< regulators - NMC, e.g., market players, netting legislation contacts,
< lawyers working on master agreement development, and others relating to
< preparation for our conference planned for Brazil next year.
<
< Please confirm your availability.
<
< Best regards,
<
< Pedro Martinez - Delgado
< International Swaps and Derivatives Association, Inc.
< 600 Fifth Avenue, 27th Floor
< Rockefeller Center
< New York, NY 10020-2302
< Direct: (212) 332-1207
< Fax: (212) 332-1212
< Email: pmartinez@isda.org
<

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