GAAMA appendices, references, and CV ...

• Author: Boyko, Stephen A.

Appendix A: Glossary

"AIDA" is an acronym for customer evolution through the stages of awareness, interest, decision, and action.

Asset stripping: selling of corporate assets at a large discount with prices negotiated at less-than-arm's-length to provide personal gain for management.

[B.sup.3] symbolizes the core components of a deal as brains, bucks and been-there. It is a more-complete and lower-cost alternative to traditional financial consulting.

Bought vs. sold distinction

The table below distinguishes between goods and services that are "bought in reverse markets" and that are "sold in target markets." A reverse market is where the customer initiates a transaction with a vendor. Goods and services that are "bought" in reverse markets are self-selected by consumers. They are complete with respect to both product information and market infrastructure. Goods and services that are "sold" in target markets are regarded as "works in progress." They require firm sponsorship in order for transactions to be completed. Intermediaries compensate for a lack of product information and/or market infrastructure deficiencies until goods and services develop and can be integrated into society at large in reverse markets.

Firm Product Consumer Market Products Components Components Process Buying Need fulfillment Awareness Order-taking Explaining Distribution channels Interest Demonstrating Promoting Advertisement Decision Brokering Selling Strategic elements Action Creating "Clooshka" is the Ukrainian word for hockey stick. Investment analysts look for stock charts that look like hockey sticks to illustrate models of success.

Complexity theory deals with processes where a large number of seemingly independent elements act coherently.

Fractals are self-similar parts that are related to the entire entity as leaves on trees.

Firms are economic units that transform inputs into outputs for use by other economic agents. Firms evolve through distinct phases of customer and valuation development.

GAAMA is an acronym for:

* Global: widespread;

* Asynchronous: not timely information;

* Asymmetrical: unequal access to information;

* Market: real goods and services / financial system; and

* Activity: researching, pricing, manufacturing, transacting, clearing, and settling.

By way of background, the GAAMA model was first introduced at the 1997 PFTS Securities Conference in Kiev, Ukraine. It was developed in response to excessive transaction costs that ultimately would have constricted the development of the Ukrainian Capital Market. Seeking guidance in the field of transaction cost economics, I corresponded with Dr. Ronald Coase Ph.D.

Governance structures organize the economic activity between and among markets, firms, government agencies, and industrial policy enterprises.

"IDAC" or Issuer Disclosure and Analytic Center, is a regional collaborative commerce platform that provides liquidity for portfolio investors. IDAC establishes an informational and professional services cooperative network for capital markets in the Eastern European Region. IDAC increases market efficiency and transparency for issuers and market participants to enable them to be integrated more readily into a global capital market

"IDAN" or International Dealer Access Network, is a regional collaborative commerce platform that provides materiality for venture investors. IDAN is a financial advisory and funding service that facilitates economic development by serving as a global incubator for the establishment of strategic alliances.

Infomediation is the process by which manufacturers educate consumers as to the product qualities and transactional processes. John Hagel coined the concept of an "infomediary" in his book "Net Worth".

Intermediation is the process by which third-party agents educate consumers as to the product qualities and transactional processes.

Markets are coordinated pricing systems that allocate voluntary exchanges between consumers, workers, and owners of production (Adam Smith's invisible hand). Efficient economies are a function of planning, transacting, infomediating, and regulating. Markets are either normative (equilibrium and near-equilibrium) or GAAMA (far-from-equilibrium).

Networks are e-commerce hubs. One-way, B2C, networks called "Sarnoff Networks" after the inventor of TV broadcasting deal directly with buyers to create benefits for sellers. B2B e-commerce hubs tend to be two-way networks that are called "Metcalfe Networks" after Metcalfe's Law of switched networks. They mediate between buyers and sellers to create benefits for both buyers and sellers. Consequently, the value created by B2C hubs tends to increase linearly with the number of buyers, while the value created by B2B eHubs increases as the square of the number of participants.

Paradox of the Economy illustrates the policy maker's dilemma to be open and closed at the same time. Economies have to be open to new innovations while remaining focused on their comparative advantage in the marketplace. Economies must accommodate market transparency with firm trade secrets. This requires a reflexive exchange of commercial activity among the four governance structures.

Reflexive refers to George Soros' description of the dynamic tension in market activity as evidenced by the actions, perceptions, and beliefs of market participants.

Reverse market: is where the customer initiates a transaction with a vendor. Goods and services that are "bought" or self-selected by consumers in reverse markets are complete with respect to both product information and market infrastructure.

Rules for the capital market are defined as "the retrospective codification of best-practices for operational efficiency".

1. Rules codify best-practice

   * Rules respond to securities activity

   * Codification represents an "ivory-snow" consensus (99.44% agreement)

2. Rules enable technology to "disintermediate" the non-value added factors of the transaction. The table below illustrates how the US capital market used technological innovations to increase societal participation and capitalization while lowering transaction cost (SIA Factbook, 2000).

3. Rules are proscriptive limitations that provide a "net benefit" to society.

   * Balance sheet criteria measures wealth as increases in capital stock value.

   * Income statement criteria measures job creation as increases in real GDP.

4. Rules are proportionate with the current level of commercial activity conducted in the securities market.

5. Rules are defined in terms of gravitas and granularity.

   * Gravitas: SEC Rule 15c3-1 require a securities firm to cease doing business if it is not in compliance

   * Granularity: SEC Rule 15c3-1 defines the "haircut" or percentage deduction to be applied to each category of assets in the computation of net capital.

   "Securitized colonization" occurs when a lack of competition among investor categories create monopolistic pricing opportunities for foreign direct investors. FDIs have a "make" or "buy" decision. They purchase foreign enterprises in order to outsource high-touch, stagnant services to subsidize the production of their value-added elements.

   Societal trend characteristics are:

1. Self-evident for the duration of the trend's cycle;

2. Of a significant period of time (six to ten years);

3. Material in scale, scope, and span;

4. Homogeneous in nature;

5. Greater than one per cent of GDP with a growth rate more than five times the GDP growth rate;

6. Consistent with public policy (supported by governmental regulation, subsidies, and tax incentives); and,

7. A reflexive process that is a continuous function during the trend's cycle.

   Standards are prospective industry norms or aspirations. Standards are defined in terms of "mass" indicating the number of people effected by the command and "materiality" indicating the relative importance of the command. The FLITE Market Model is the paradigm for capital market standards. If capital markets are to contribute to the...