1. Miki Kolobara, Esq. November 8, 2004
Energy Trading APPA 2004 Legal Seminar Workshop November 7-10, 2004 San Francisco, CA
Miki Kolobara, Esq.
November 8, 2004

2. Commodities Trading Universe
Exchange Trading (Futures Contracts)
Standardized contract terms
High liquidity
Performance guaranteed
Requires marking-to-market / margin
No credit risk
Over-the-Counter (OTC) Trading (Forward Contracts)
Customized contract terms
Low liquidity
No performance guaranty
No requirement for marking-to-market / margin
Credit risk
Energy Trading / M. Kolobara, Esq

3. Evolution of Commodities Trading Regulation
Commodity Exchange Act (1936)
Futures Trading Practices Act (1992)
Swap Exemption Rule (1993)
Commodity Futures Modernization Act (2000)
Enforcement
Commodity Futures Trading Commission (CFTC)
Securities and Exchange Commission (SEC)
Federal Energy Regulatory Commission (FERC) ???
Energy Trading / M. Kolobara, Esq

4. Standard Industry Agreements
North American Energy Standards Board (NAESB) Agreement
Western System Power Pool (WSPP) Agreement
Edison Electric Institute (EEI) Agreement
International Swaps and Derivatives Association (ISDA) Agreement
Energy Trading / M. Kolobara, Esq

5. Risk Management Types of Risk Involved Risk Integration
Legal Risk
Market Risk
Counterparty Risk
Operational Risk
Risk Integration
Trend to Centralize Risk Management
Energy Trading / M. Kolobara, Esq

6. Master Agreement Structure
Energy Trading / M. Kolobara, Esq

7. Who is Usually Involved
Energy Trading / M. Kolobara, Esq

8. Current Issues of Interest
Post-Enron Stress Disorder
Here Come the Banks
Forward Contract Merchant: If it looks like a Duck and walks like a Duck, it’s a Pigeon.
Energy Trading / M. Kolobara, Esq