(September 2012) Our annual financial ranking shows some remarkable shifts among the industry’s shareholder value leaders. Despite flat demand and low commodity prices, investor-owned...
e-Commerce Collusion? The Trustbusters Take Aim
able to act on the EnronOnline prices via either platform. EnronOnline also executed a memorandum of understanding to connect its trading system to the independent True Quote energy exchange, to which PG&E Corp. has committed some of its energy trading volume.
Dar said that under such circumstances, energy traders, who have an incentive to front run, might try to force exchange prices to move in favor of their trading books. In other words, Enron more easily could game the prices offered on the independent exchanges.
A spokesman for Enron, however, argued that the link up to the exchanges is merely another distribution channel for displaying prices. "Enron could offer the same price whether it was linked up to Houston Street or trading on Houston Street."
The spokesman denied that Enron could manipulate prices on the neutral exchanges. "In the end, it is going to be about offering the best price," he said.
Meanwhile, Dar suggested that Enron's decision to link with the independent exchanges might be a survival play. "It's a matter of business model evolution; Enron knows that proprietary online trading forums will be supplanted by huge neutral or independent digital, many-to-many markets."
Dar speculated that Enron was transitioning from a closed proprietary to an open independent e-exchange.
"The sharing of price postings is the first baby step; having used a proprietary online trading floor to reach transactional critical mass, Enron may be ready to evolve its business model so in a year or less it could do an IPO of the business as a leading independent T2T [trader-to-trader] e-exchange."
Protecting National Security: Technology Isn't Enough
To the surprise of many, the very Web technology developed to protect the integrity of corporate buying and selling habits on e-exchanges was called into question at the FTC conference.
"Much of the hardware and architecture was never designed to have the level of security to prevent outsider intrusion," said Jeffrey Hunker, senior director at the Critical Infrastructure Assurance Office (CIAO), part of the White House's National Security Council.
The President's Commission on Critical Infrastructure Protection was the first national effort to address the vulnerabilities created in the new information age. The commission, established in July 1996 by Presidential Executive Order 13010, was tasked with formulating a comprehensive national strategy for protecting the Web infrastructures from physical and cyber-threats. Critical infrastructures are defined as systems whose incapacity or destruction would have a debilitating impact on the defense or economic security of the nation. These include telecommunications, electrical power systems, gas and oil, banking and finance, transportation, water supply systems, government services, and emergency services.
In a late-June hearing before the House Government Reform Committee, Subcommittee on Government Management, Information and Technology, John S. Tritak, director at the CIAO, outlined some of the risks.
"Restructuring, including deregulation, is driving companies to apply these new [Web-based] technologies more widely to perform core business functions and operations," he said.
Tritak acknowledged that there will be benefits, but with those benefits come risks. "The interplay between complexity and technology increases geometrically the different ways technical failures can occur. More