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SME Capital Market Participants and Their Roles Invitation to Market Participants

ContributorsI Draft as of March 22, 2012 Overview This article creates a context for how SME Capital Market Participant Roles are being identified and then listed in www.smecapitalmarkets.net directories. Click on SME Capital Market Participant Role Descriptors under the Knowledge Tab to view the current list of roles that have been identified. Please consider this information piece an invitationII to participate in identifying and expounding on market participant roles engaged in SME capitalization. It is also an invitation to recommend edits or add content to this article and any other information piece that is posted on www.smecapitalmarkets.net.

The SME Capital Markets Knowledge Tab ModelIII is developing categories and content through the lens of applying neural network theory and practicesIV. SME Capital Market Participants are listed by role so that distinct SME capital market niches can be identified and niche-specific surveys can be developed and undertaken. Over time this will guide the process of creating additional information pieces about the most productive SME capital market niches. The term Market Participant has different meanings depending upon the person or group who is using it. This article supports a proposition to identify the largest possible array of SME capital market niches and their Market Participant roles. The largest frame possible is used to describe the term Market Participant, intended to include all entry-level capital market structure stakeholders. One way to view this Market Participant frame is to envision that it includes all

market actors1, all market driving organizations2 and all networks and architecture3 that frame, organize or develop any SME capitalization segment. However one defines Market Participants in their individual work roles, niches or networks, stepping back to view SME Capital Market Participant roles from a big picture perspective leads to a better understanding about the importance of competitive interactions between Market Participant roles. The goal of the content being presented in SME Capital Market Participants and Their Roles is to help readers identify greater arrays of productive roles and extend the knowledge base represented by these roles further into business and economic development activities. In many ways, civilizations qualitative future depends upon society developing competitive policies and programs that can effectively allocate capital to the global segment of Small-toMedium-Enterprises (SMEs). It also includes projects to organize, develop and operate secondary markets that provide liquidity, exit strategies and profits for the investors who provide capital to SMEs. Globally, job creation and economic development depend upon SMEs. From this perspective, Global Market Participants are all people, entities, policies, programs and structures engaged in endeavors to provide debt or equity capital to SMEs, liquidity to investors, regulatory services and policy implementation. . One platform to view market participant roles from a broad global perspective is the Organisation For Economic Cooperation and Developments (OECD) and its 45 year track record of creating Global Market Participants and influencing their actions based on Article 1 of the OECD Charter. The aims of the Organisation for Economic Co-operation and Development (hereinafter called the "Organisation") shall be to promote policies designed:
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Any entity caught up in a network of relations, in a flow of intermediaries which circulate, connect, link and reconstitute identities. What the notion of externality shows, in the negative, is all the work that has to be done, all the investments that have to be made in order to make relations calculable in the network. This consists of framing the actors and their relations. Framing is an operation used to define individual agents which are clearly distinct and dissociated from one another. It also allows for the definition of objects, goods and merchandise which are perfectly identifiable and can be separated not only from other goods, but also from the actors involved, for example in their conception, production, circulation or use. It is owing to this framing that the market can exist, that is to say, that distinct agents and distinct goods can be brought into play since all these entities are independent, unrelated and unattached to one another. Michel Callon, Actor-Network Theory the Market Test, published by the Department of Sociology, Lancaster University, Lancaster LA1 4YL, UK at http://www.comp.lancs.ac.uk/sociology/papers/CallonMarket-Test.pdf
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firms do not need to strictly follow their customers' voice; they can also lead their needs in new directions by dramatically increasing the customer value proposition and improving business systems, a strategy best described as market-driving (Harris and Cai 2002; Jaworski, Kohli, and Sahay 2000; Kumar, Scheer, and Kotler 2000 Market-Driving Organizations: A Framework, Academy of Marketing Science Review, 2004 by A, Franois, Jaramillo, Fernando, Locander, William B , http://www.findarticles.com/p/articles/mi_qa3896/is_200401/ai_n9387766
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distinction between two types of markets and market coordination: those based on social networks and those based on a flow architecture. Flow architectures involve potentially global scopic reflex systems (GRSs) that project market reality while at the same time carrying it forward and allowing it to flow. From Pipes to Scopes: The Flow Architecture of Financial Markets, Karin Knorr Cetina, Department of Sociology, University of Konstanz, Box D-46, 78457 Konstanz, Germany, karin.knorr@uni-konstanz.de, http://www.uni-konstanz.de/ssf-conference/KKC.pdf

(a) to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; (b) to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and (c) to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.4 Recently the relevance of these principles were reflected in OCED efforts to help the Russian Federation become a market participant in the global economy. As Russia moves past crisis stabilisation concerns and into the next phase of economic expansion, new priorities include the broadening of economic growth into more domestic industries and geographic areas and the creation of new investment and new business opportunities. This will require the further restructuring of regulated sectors to promote investment and provide support for overall growth, as well as the removal of both state and private impediments to entry and to vigorous and fair competition in a transparent and open environment. And, Competition policy is central to regulatory reform, because its principles and analysis provide a benchmark for assessing the quality of economic and social regulations, as well as motivate the application of the laws that protect competition. As regulatory reform stimulates structural change, vigorous enforcement of competition policy is needed to prevent private market abuses from reversing the benefits of reform. A complement to competition enforcement is competition advocacy, the promotion of competitive, market principles in policy and in regulatory processes.5 The scope of the Market Participant frame and role of competition is described by the U.S. Department of Justice and the Federal Trade Commission Horizontal Merger Guidelines: The Agency's identification of firms that participate in the relevant market begins with all firms that currently produce or sell in the relevant market.6 In addition, the Agency will identify other firms not currently producing or selling the relevant product in the relevant area as participating in the relevant market if their inclusion would more accurately reflect probable supply responses.7

Convention on the Organisation for Economic Co-operation and Development, Paris, 14th December 1960, http://www.oecd.org/document/7/0,2340,en_2649_201185_1915847_1_1_1_1,00.html ???
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Executive Summary, Page 5 and 6, OECD REVIEWS OF REGULATORY REFORM, REGULATORY REFORM IN RUSSIA, THE ROLE OF COMPETITION POLICY IN REGULATORY REFORM, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, http://www.oecd.org/dataoecd/14/48/34985306.pdf
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U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines, Section 1.3 Identification of Firms That Participate in the Relevant Market, 1.31 Current Producers or Sellers, http://www.usdoj.gov/atr/public/guidelines/horiz_book/13.html
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U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines, Section 1.3 Identification of Firms That Participate in the Relevant Market, 1.32 Firms That Participate Through Supply Response http://www.usdoj.gov/atr/public/guidelines/horiz_book/13.html

The purpose of this brief overview is to help readers refresh their recollections that SME Capital Markets are composed of and connected to many kinds of stakeholders. A Stakeholder is an individual person or other legal entity able to act like a person (e.g. a Limited Company, an Industry Regulator, a Registered Charity) playing one or more Roles. Note, however, that in accordance with common usage we loosely describe both Slots and Roles as stakeholders when the class/instance distinction is not of immediate concern.8

Each successful SME capitalization project begins by someone organizing a team of people who have a knowledge base about a specific niche and a unique suite of capabilities, relationships and resources to undertake and successfully complete the level of work that is required to produce acceptable results. Individual SME Capital Market Participants tend to form their own networks of specialists and generalists who work under established performance agreements and models. Typically these networks have produced successful track records in a distinct SME niche within the greater capital markets. This coalescing of a networks knowledge and performance into functional market roles means that when one is able to identify and contact participants by capability, project, product, service and economic development, policy maker or securities regulatory role, the result is the formation of a knowledge base specific to the needs of the SME. The real effectiveness of the network depends on how the people who you know are connected to other people you know as well as to people who you dont know.9 www.smecapitalmarkets.net site activates and accelerates this process of discovering and connecting by presenting groups and networks of known performers to a greater spectrum of the SME capital market and it does so by aggregating and offering directories of people that are grouped by SME Capital Market specialty role. Combinations of these roles and interplay between them are creating, organizing and developing unique niches within the SME Capital Market segment. Each distinct SME Market Participant Role represents a capability block in an infrastructure and system that facilitates raising SME debt or equity capital, or produces the information necessary to do so and/or contributes to organizing and developing capital markets (niches) where debt or equity capital is created and/or provides venues where securities associated with SME capitalization projects can be traded. Every role is a unique pathway to access a broad range of information about initiatives, projects and polices that are underway to organize and develop SME capital market niches. Each role is also a unique aggregation of knowledge about distinct SME capital market programs or niches. Knowledge management and organizational development experts tend to explain it in this way: Waddell emphasizes the importance of creating processes that create innovation-generating interaction between the three key systems of society (Parsons 1951)the political, economic, and
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Alexander, Ian F., Scenario Plus, London, UK, A Taxonomy of Stakeholders: Human Roles in System Development, International Journal of Technology and Human Interaction, Volume 1, Number 1, http://easyweb.easynet.co.uk/~iany/consultancy/stakeholder_taxonomy/stakeholder_taxonomy.htm
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Professor Mikolaj Jan Piskorski, OB382: Managing Organizational Networks, Graduate School of Business, Stanford University, Spring 2004, http://www.people.hbs.edu/mpiskorski/teaching/OB38204.pdf

social, which are represented respectively at the organizational level by government agencies, businesses, and community-based organizations.10 Knowledge management and organizational development experts tend to focus on large scale complex organizations and miss or not address how specialist roles emerge to organize and develop SME Capital Market niches. While the discussion of how knowledge and behavior coalesce into Market Participant specialist roles is a subject beyond the scope of this overview, one can observe that entrepreneurial mindsets, flat organizational structures and multiple client and project experiences are critical factors that drive the process of coalescing information, knowledge, skill and competency into capital market specialist roles and especially toward the formation of SME niches. Thomas Friedman captures the essence of the coalescing process in describing his impulse to write The World is Flat -- when all of these things suddenly came together around 2000 -- they created a platform where intellectual work, intellectual capital, could be delivered from anywhere. It could be disaggregated, delivered, distributed, produced and put back together again -- and this gave a whole new degree of freedom to the way we do work, especially work of an intellectual nature...And what you are seeing today is really the culmination of all these things coming together.11 One SME Capital Market Participants website presents a good example for how coalescing works to create a high producing specialist role: were a small firm made up of three partners with big national and local firm backgrounds. Our past experience has taught us that big accounting firms cant and don't serve small clients economically. Their overhead expenses, leverage models and service delivery methodologies make it difficult to serve their small clients profitably. As weve grown, weve discovered that minimizing our overhead, tailoring our methodologies to small-company dynamics and delivering the work ourselves as partners enables us to help our smaller clients navigate the complexities of compliance without charging big firm fees. Weve also found that our approach to delivering small company compliance services is unique. Our competitors are the national and large local firms and their size, burden and bureaucracies inhibit their ability to offer what small companies need knowledgeable professionals delivering efficient, yet high-integrity services, all priced for small company budgets. Because of our unique approach at Malone & Bailey, we serve a significant number of small public companies. This provides us the distinct advantage of having as much or more experience conducting these audits and working with the SEC on small public company matters than virtually any other non-national firm in the U.S or any other firm in Texas.12 A vast array of SME Capital Market Participants are coming into the market place because of the coalescing phenomena. They are capitalizing an ever-expanding network of SMEs globally and facilitating the normalization of networks for their transactions. Government economic development entities, securities regulatory organizations, business and professional associations,
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Steve Waddell. Verna Allee, GLOBAL ACTION NETWORKS AND THE EVOLUTION OF GLOBAL PUBLIC POLICY SYSTEMS, Page 4, January 20, 2004, http://www.vernaallee.com/library%20articles/ICSTM%20paper.pdf
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Friedman, Thomas, The World Is Flat: A Brief History of the Twenty-first Century, Farrar, Straus and Giroux, New York, Copyright 2005 by Thomas L. Friedman, ISBN-13:9780-374-29288-1
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Malone & Bailey, PC, Certified Public Accountants, Specializes in providing high-integrity compliance services to small publicly-traded companies, Total client measures rank Malone & Bailey PC in the top 10 of all U.S. public company audit firms, http://www.malone-bailey.com/ourservices.htm

companies and individual market participants are adjusting their policy, regulatory regime, business and practice models and in many instances are doing so in a rush to catch up with SME Capital Market Participants existing global business practices. It remains to be seen how SME Capital Markets will evolve. Most likely they will look, be and operate different from todays traditional stock exchanges and country concentric company and market participant regulation. Meanwhile SME Market Participants have organized and developed capital market niches that support a very broad global SME-centric network. The www.smecapitalmarkets.net site presupposes that the world is flat as it pertains to SME Capital Market Participants entering the market due to coalescing phenomena. The site is organized and developed around the argument that groups of market participant specialist roles do replicate capital market functions and thereby create unique SME Capital Market niches with both SME-specific stakeholders and Global Markets stakeholders that will depend on the SME niche for future growth. The challenge is to identify the groups of SME Capital Market Participant roles and SME Capital Market niches that create the highest value and extend them further into the market place. The vision and strategy for this site is an endeavor to identify and present the SME Capital Market Participant roles, producers and market niches that create the highest value.

The SME Capital Market frame includes everyone that works in any sub-market or on any project that enables small-to-medium-enterprises (SMEs) to raise debt or equity funding and it includes all secondary markets in which the financial instruments representing those funds are traded. It also includes all transactions that monetize, securitize or produce exchanges of SME investment value. It thus aggregates a global array of SME capital market participants, identifying their roles, conducting surveys, facilitating knowledge exchange and creating directories that can help others execute capital market projects

For purposes of aggregating a global array of SME capital market participants, identifying their roles, conducting surveys, facilitating knowledge exchange and creating directories that can help others execute capital market projects, the SME Capital Market frame includes everyone that works in any sub-market or on any project that enables small-to-medium-enterprises (SMEs) to raise debt or equity funding and it includes all secondary markets in which the financial instruments representing those funds are traded. It also includes all transactions that monetize, securitize or produce exchanges of SME investment value. SME Capital Market Participant roles encompass all the capabilities, policies, programs, regulatory regimes, products and services that are associated with raising funds or organizing and developing SME capital market niches or mitigating risk and all of the people that participate in these endeavors. SME Capital Market Participant roles may be fulfilled by public or private organizations, individuals or firms, authorized or un-regulated entities, product or service providers and retail or wholesale vendors. A unique array of roles and productive interaction generates capital to SMEs and creates value for the investors that provide the capital. Identifying the range of SME Capital Market Participant roles begins by conceptualizing a global context. SME Capital Market Participant roles produce information and/or provide services that help transfer capital from individual savers to agents with the managerial and entrepreneurial talent to create investment opportunities that provide capital to firms and risk-pooling and mitigation programs to investors. Three phases of research and analysis were instilled into identifying distinct SME Capital Market Participant roles:

Phase one encompassed researching articles, reports and studies about capital markets to develop a Capital Market Participant knowledge base. Phase two encompassed analyzing upper tier product and service offerings to identify a list of roles or descriptors that produce measurable results. Phase three encompassed researching the interplay between upper tier capital market roles and SME Capital Market Participant roles. Google hits were used as a proxy to measure how deep each upper tier role has drilled into the market place and how much interplay there is between an upper tier role and the SME segment. In those instances where there was little or no improvement in the drilling measure or no evidence that there was interplay between an upper tier role descriptor and the SME segment those roles were eliminated from the list. This research was undertaken by a group of Texas A&M MBA students associated with Texas A&Ms Center for New Ventures and Entrepreneurship. http://cnve.tamu.edu/ To view a complete list of Roles click on SME Capital Market Participant Role Descriptors. To identify other SME Capital Market Participant Roles that should be included on the list please click on Contact Us at www.smecapitalmarkets.net Framing a Knowledge Base for SME Capital Market Roles Solomon Tadesse, in The Allocation and Monitoring Role of Capital Markets: Theory and International Evidence13 articulates that the role of capital markets is to efficiently allocate resources and monitor their utilization within the firm. He describes how capital markets perform two distinct functions: provide capital and facilitate good governance through information production and monitoring. He argues that the governance function has more impact on the efficiency with which resources are utilized within the firm and that there is a positive correlation between the role of market based governance and improvement in industry. Finally his research across thirty-eight countries reveals that capital provision services induce technological changes that also bring forth socially valuable services. Tadesses work guides readers to understand how society benefits when individual SME Capital Market Participant roles help transfer capital from individual savers to agents with managerial and entrepreneurial talents to develop investment opportunities that provide firms risk pooled capital and investors risk-pooling and risk sharing facilities. Globally the scope of SME Capital Market Participant roles is most effective when they provide governance services both as information producers and delegated monitors as well as providing for the mobilization of capital. Market participant doctrine is a United States legal construct -- according to the market participant doctrine the state does not violate the dormant commerce clause by favoring its own citizens and companies when it buys and sells goods or services.14 Market participant has morphed into a common and widely used term to address interest groups -- We hear constant demands from market participants, the media and even the general public for regulators to intervene with new
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Tadesse , Solomon, The Allocation and Monitoring Role of Capital Markets: Theory and International Evidence, The University of South Carolina, http://fic.wharton.upenn.edu/fic/papers/05/0523.pdf
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Bogen, David Skillen, "The Market Participant Doctrine and the Clear Statement Rule" (June 2005). U of Maryland Legal Studies Research Paper No. 2005-42. http://ssrn.com/abstract=740384

rules and more enforcement to deal with the latest revelations of fraudulent, abusive, or unfair market conduct.15 Market participant is a globally recognized term that describes a wide range of people -- Internet technology has now become a major driving force to the market evolution, extending enormous impact on market participants and regulators, and changing the patterns of securities issuance, trading, clearing and settlement, and information dissemination16 Systemic use of the term market participant applies it to include gate keepers, intermediaries, traders, self regulatory associations, exchange and capital market system operators, state owned entities and policy enforcers -- Market participants--creditors, shareholders and analysts--can be key allies of the regulators by penalizing institutions that perform poorly or take excessive risks. For market discipline to be effective, however, market participants must be adequately informed about the risks these banks are taking, and hence the important role played by financial transparency in Basel II. 17 Determining who is covered in the market participant doctrine has not been tested in the U.S. courts for more than 20 years. Global finance today is dominated by private capital flows, and private actors18 and therefore SME Capital Markets must include the widest possible identification of Market Participant roles. It includes individuals and companies that fulfill capital raising functions, professional practitioners that produce information, transaction system operators and those responsible for making the policy that creates SME economic development environments where capital raising services can be delivered or markets organized and developed. This scope also includes people responsible for supervising the regulation of capital and securities markets and the associations, educational institutions and organizations that study or support these endeavors. SME Capital Market Participant roles include anyone and everyone that is engaged in policy making or imposing regulatory regimes that apply the principles of capital and securities markets by executing procedures and practices to raise debt or equity capital, produce information or deploy technology that facilitates organizing and developing each and every SME capital market niche. Each SME Capital Market Participant role represents one capability block that is a critical component and success factor to effectively organize and develop any capital market niche. Market Participant roles include policy makers and regulators because they create the environment and oversight that is necessary to organize and develop SME capital market niches. The list of roles also includes upper tier institutions because there is growing interaction of emerging markets with developed capital markets. The complexity of roles and their interactions cant be overstated

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Hyndman, Douglas M., Chair British Columbia Securities Commission, A New Approach to Securities Regulation More Effective Less Costly BCSC Capital Ideas Conference , Vancouver, British Columbia, September 15, 2004, http://www.bcsc.bc.ca/uploadedFiles/Hyndman_2004-09-15.pdf
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Speech by Dr. Zhou Xiaochuan , Chairman of the China Securities Regulation Commission, Peoples Republic of China, Securities Market Regulation in the Internet Age, Public Documents of the XXVIth Annual Conference of the International Organization of Securities Commissions (IOSCO), Plenary 1, Impact of the Internet on the Functioning and Regulation of Markets, 27 June 2001, http://www.iosco.org/library/annual_conferences/pdf/ac15-6.pdf
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The principal authors of this study were: Susan Burhouse, John Feid, George French, and Keith Ligon, Basel and the Evolution of Capital Regulation: Moving Forward, Looking Back, Federal Deposit Insurance Corporation, An Update on Emerging Issues in Banking January 14, 2003,
http://www.fdic.gov/bank/analytical/fyi/2003/011403fyi.html
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Capital Markets in a Global EconomyRecent Developments, Remarks by Rodrigo de Rato Managing Director of the International Monetary Fund, at the Institute of International Finance Spring Membership Meeting, Madrid, Spain, April 1, 2005, http://www.imf.org/external/np/speeches/2005/040105.htm

as one begins the process of aggregating a global directory of the generalists and specialists that drive SME capital markets. In summary the Role of Participants in SME Capital Markets includes but is not limited to: Regulators, financial institutions and government policy makers; Issuers of debt and equity securities (capital consumers); Investors including individuals and institutions (capital providers); Professional practitioners: accountants/auditors, analysts, broker-dealers, business brokers, underwriters, merchant and investment bankers, securities lawyers, management consultants, information specialists and business services providers. Financial intermediaries: commercial banks, merchant banks, mutual funds, insurance companies and private actor individuals and institutions that monetize, securitize or transform SME valuation;

SME Capital Market Participant roles are at the forefront of a global vanguard of digital economy innovation, creation and development that is guiding government policy makers, regulators, securities exchange commissions, central banks, ministries of finance, etc. toward developing effective SME debt and equity capitalization policies and programs. An overview of the historic changes in the ways global capital markets function, how they are likely to develop and their need to engage in regulatory dialogue is provided by Ethiopias Tafaras May 13, 2004 Testimony Concerning Global Markets, National Regulation, and Cooperation before the House Financial Services Committee.19 Innovative Use of Information Technology and Internet Capabilities Creates New, More and Different Specialist Roles Common sense helps us understand that as the cost of information technology comes down and the power of its applications and capabilities goes up innovative people will apply their knowledge to create value. It is less clear how and why this curve is exploited by groups of capital market participants instilling their know-how into technical applications that produce orders of magnitude performance improvement and lower cost measures. Capital market specialist roles appear to be created by like-minded people finding each other. In fact it encompasses like-minded people sharing tacit knowledge. Suliman Al-Hawamdeh addresses this in his article Knowledge management: re-thinking information management and facing the challenge of managing tacit knowledge.20 They talk about tacit knowledge to explicit knowledge conversion. According to them knowledge conversion is about the interactions between explicit and tacit knowledge in continuous and spiral manner. Unlike skills and competencies, their "Know how" can be documented and the knowledge can be transferred through an independent learning process.

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Testimony Concerning Global Markets, National Regulation, and Cooperation by Ethiopis Tafara Director, Office of International Affairs U.S. Securities and Exchange Commission, Before the House Financial Services Committee, May 13, 2004, http://www.sec.gov/news/testimony/ts051304et.htm

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Suliman Al-Hawamdeh, School of Communication and Information, Nanyang Technological University Singapore, Knowledge management: re-thinking information management and facing the challenge of managing tacit knowledge, Information Research, Vol. 8 No. 1, October 2002, http://informationr.net/ir/81/paper143.html

When talking about knowledge management, it is clear that we are dealing with a set of complex issues that are interrelated and cannot be segmented. This is because much of the knowledge creation activities are products of people interacting with people, people interacting with data and information, people interacting with systems and people interacting with the environment in which they operate. Understanding tacit knowledge is essential to the development of an effective approach to knowledge management. The three different types of knowledge that knowledge management is concerned with are: 1. Explicit knowledge (information). 2. "Know how" or implicit knowledge (Can be captured and codified as information) 3. Tacit knowledge (Cannot be captured and codified as information). These concepts are amplified in a Gerais and Ferreira article Using information technology to support knowledge conversion processes and are summed up by this The intelligence of knowledge workers is said to be the fuel of organizational growth.21 Applying knowledge management is a dynamic-background-mastery practice that develops new roles through the process of value being created. Capital Market Participants are uniquely positioned to develop this mastery because of their exposure to information and the technology to produce, analyze, present and manage or connect other people to it. The prevalence of information technology platforms and the Internet cannot be overstated as the prime factor that drives performance enhancement for upper tier capital market roles and creates SME Capital Market roles. Dynamic interplay between these two groups expands the traditional Capital Market Participant roles and introducs them into the previously impossible to encompass SME market space, creating SME Capital Market Participant roles. The first dynamic is created by existing upper tier capital market specialist roles directing their business models toward SME Capital Market opportunities. The second dynamic is created by entrepreneurial practitioners in the SME Capital Market space exploiting new opportunities that can only be organized, developed and executed on Internetenabled IT platforms. Upper tier groups bring massive IT platforms operated under costly and extensive regulatory compliance constraints to the SME Capital Market space and the entrepreneur groups bring executing innovative models that are generally near the edge of regulatory cost and practice constraints and often times unfettered by them. These two dynamics benefit SME Capital Markets by creating a global horizontal network that can be served by best of class performers in vertical roles. Actual examples help one understand how these two dynamics contribute to creating a global horizontal network that supports vertical roles. One example is D&B (NYSE:DNB), www.dnb.com a 160-year-old provider of global business information. D&B operates a global platform that supports credit and debt capital provider choices. Benefits of the platform are activated by a D&B D-U-N-S Number that is assigned to each business in D&Bs global database. This number is part of a system that makes it possible to generate comprehensive financial reports on more than 100 million companies. The global database is updated over 1.5 million times a day by D&B gathering business information from companies in over 200 countries and in 82 languages that cover 181 currencies. Analyzing D&Bs reach22
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Using information technology to support knowledge conversion processes, Rodrigo Baroni de Carvalho, Banco de Desenvolvimento de Minas Gerais (BDMG) Belo Horizonte, Brazil, Marta Arajo Tavares Ferreira, Universidade Federal de Minas Gerais (UFMG), Belo Horizonte, Brazil, Information Research, Vol. 7 No. 1, October 2001, http://informationr.net/ir/7-1/paper118.html
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See Note 4 and D&B Column in Regulatory Organizations, Securities Law, SME Regimes and Exchanges by Country, www.smecapitalmarkets.net

reveals that it can provide comprehensive information on companies from countries in which 6 billion people or 93% of the world population lives. Anyone with Internet access in one of these countries can gain access to DNB information and reports. This capability has been instilled into SME actor efforts to capitalize their global business transactions. Another example is PayPal, www.paypal.com, owned by eBay Inc. (Nasdaq: EBAY). PayPal is a 7-year-old company that enables any individual or business with an email address to securely, easily and quickly send and receive payments online. PayPal's service builds on the existing financial infrastructure of bank accounts and credit cards and utilizes the world's most advanced proprietary fraud prevention systems to create a safe, global, real-time payment solution for 78 million account members worldwide. PayPal supports global commerce and the exchange of capital. Currently PayPal Fund transactions are enabled in 56 countries or 22% of the world's geography. Analysis23 of these 56 countries reveals that PayPal is available to anyone with an email address in geographical places where 4.1 billion of the worlds 6.5 billion people live or to say it another way 63% of the worlds total population can theoretically exchange funds by email. Entry Level Market Structure SME level capital market participants create entry level market niche structures by applying knowledge and information technology models to address and guide business model and plan, management team, market and operational risk and uncertainty in asymmetrical information environments. These groups of market participants work under conditions of uncertainty to produce information. Market participants tend to flow capital when SMEs reach milestones. Relatively to the upper tier, predictability models can't be applied to SME's in the same way as they are in upper tier capital markets. It is the sum total of all SME capital market participant market actor activity and their innovative use of information technology applications that drives organizing and developing entry level capital market structure. In the SME capital market segment entry level market structures will continue to be created by firms, market participants, policy makers and securities regulatory organizations adapting to new realities. This information piece attempts to describe why a broad array of market participants are important and must be viewed in a neural network context. SME-CM recommends that you read SME Capital Markets Are Organized and Developed by Interconnected Neural Networks to augment your understanding of how market participants create entry level market structures. Summary Market Participants who recognize the vital role played by SMEs are contributing to future global economic viability by interconnecting to create, organize and develop entry level capital market structures. SME Capital Market Participants are part of a global vanguard made possible by technological innovation, digital creation and new economy development that is guiding the growth of a previously overlooked but now-powerful and increasingly lucrative segment of the Small-andMedium-Enterprise capital markets.

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See Note 3 and PayPal Column in Regulatory Organizations, Securities Law, SME Regimes and Exchanges by Country, www.smecapitalmarkets.net

The Internet has made it possible for SMEs to do business globally and it has also has the potential to give them increasing access to capital on a global basis. One of the most popular sources of growth capital for US SMEs is the AIM, operating in the British Isles. The AIM is a bilateral value creation mechanism in that it provides capital for SMEs while bringing the cutting edge of technology and intellectual property innovation to the British investor and the British business community as a whole. While the AIM is a valuable addition to the SME Capital Markets, duplication of its functionality in every region is vital for the global economy. SMECM aggregates and makes available information about policy, securities regulatory organizations, securities exchanges, information technology and other market participants that are organizing and developing effective SME debt and equity capitalization policies and programs. SMECM believes that by aggregating and making available information about the service providers and other commercial actors in the SME Capital Market Participants niche roles their knowledge can be extended further into the market place. SMECM believes that by presenting this information and opening up a global exchange of information flow regarding SME Capital Markets facts, policies, regulations, market models and Market Participant roles, global growth of the SME niche will benefit by innovative financial engineering and the result will be greater flow of capital to support SME business opportunity and evolutionary business development. The SME Capital Market Participants and Their Roles information piece recognizes that a vast array of market actors, firms and organizations interconnect to address SME capitalization and that it is the cumulative effort of these interconnections that create market structure. Please help this process by using the contact form to share feedback about this information piece.

Contributors
Brad Smith, http://www.publiccompanymanagement.com/experience/boa.html Peter J. Chepucavage, http://www.plexusconsulting.com/Biographies/Partners/chepucavage.htm Stephen A. Boyko, http://www.bannekercapital.com/advisory.htm Victoria Duff, http://www.abusinessplan.com/about_us.htm

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II

Invitation to Market Participants

SME Capital Markets is developing and offering directories by aggregating names of SME Capital Market Participants by distinct market niches and capital market work roles. Contact information will be gathered from web site visitors adding their names to directories or by searching public records such as the SEC filings that were reviewed to create the SB-2 Attorney's Directory and the 10KSB Auditor's Directory. Please use the Contact Form to add your SME Capital market participant role information to the master directory and/or update information in it. You are also invited to suggest new directories of SME capital market participants that can be developed. Click on Request Form to present your directory suggestions. The following article provides context for how SME Capital Market Participant Roles are being identified and listed in www.smecapitalmarkets.net directories. Click on SME Capital Market Participant Role Descriptors to view a current list of roles that have been identified. Please consider this communication an invitation to participate in identifying the vast array of roles that are engaged in SME capitalization activities and issues. Please use the Contact Form to send suggestions for refining or adding to this information piece and/or to identify other SME capital market niche roles that you believe should be identified and listed.
III

SME Capital Markets Knowledge Tab Model

The knowledge tab model is being developed by market participants identifying category areas where information that is not easily found anywhere else can be posted. After a category area is identified, starter information pieces (1 white paper type information piece and 1 worksheet list) will be posted under each one. As entities come forward who can update the global information worksheets a schedule will be developed to create additional content for these lists. Each time a worksheet list is updated its latest content will be posted under its Knowledge Tab category. People who have an interest in adding to or refining an information piece will be listed as contributors to the paper. When information pieces have been revised or more content has been added to lists SME Capital Markets will immediately add the updated information. Neural network concepts, practices and theories drive the SME capital markets project. Hopefully what we are doing on the site is taking constructive first steps that will bring forth and support greater efforts overtime to develop each content item into more robust levels of information. One way to think about this scheme is to envision the list of content items under the knowledge tab as chapter headings in an SME Capital Markets Knowledge book. Each chapter is made up of distinct content about that subject and lists of market participants or firms that engage in market action that centers on this distinct content. The process of presenting this content and aggregating market participants and firms generates names and email addresses of participants who can be grouped by niche interest. Developing niche directories serves two purposes. First, when it is possible to survey niche participants more robust information can be presented and unique knowledge and best practices can be extended further into the market place. Second, as niche directories are developed they will be offered as products and this is one way to fund the cost of operating an SME capital market knowledge exchange website

Each category in Knowledge Tab outline will ultimately have many sub categories and as mentioned above the intention is to identify each sub category's market participants by name and email address so they can be surveyed. For example there are probably about 200 people in the world working for exchanges who deal with SME issuer listing programs. Identifying these people, capturing their email addresses and learning how to survey them will produce a fair amount of useful content. The starting point for this work is to identify all of the exchanges. Content on the SME Capital Markets by Exchange list reflects forward progress in this category. In addition to continuing to aggregate stock exchange information on this list the next step is to begin writing an information piece about SME exchange listings and market opportunities. The survey process anticipates replicating the functionality of Professor Lessig's Chapter Captains model and process to update his book. http://codebook.jot.com/WikiHome Hopefully someday SME Capital Markets will be able to follow Professor Lessig example of developing chapter (knowledge tab category) captains. However, at this moment a different approach is required and that one purpose of designing the model so niche market participants can be surveyed. As an aside, readers should skim http://codebook.jot.com/WikiHome to see how Lessig is using a network of chapter captains to refine and improve his content. The impulse for executing this site under a model that asks viewers for feedback on the content came from Stanford University Professor Larry Lessig putting his treatise about technology, culture and regulation on the web and from Stephen A. Boykos work to apply neural market theory and practices to extend capital market functionality in countries that are attempting to develop market economies. SME Capital Markets is jump starting the process by putting up content that is not easily found somewhere else, by identifying market participants and firms that are connected to this content and by doing this in a cost effective manner. Overtime the work product produced by this effort will be improved by neural network connectivity to individuals and firms who have an interest in one or more of the knowledge tab categories. The set up to support this work concept began by SME Capital Markets adding a Neural Networks Category to its knowledge tab and posting these two documents. SME Capital Markets Are Organized and Developed by Interconnected Neural Networks SME Neural Networks URL's and Overview An India based Business Process Outsourcing firm http://www.clickaccounts.com/ is thinking through how they can support this effort by continually updating the Neural Networks URL worksheet in system that begins pulling neural network people and email addresses into a unique directory. As a unique directory group is developed in the Neural Network category they will be surveyed and their feedback will be used to improve or elevate content in either the Neural Networks category content or on the site in general. Any recommendations that readers care to share will always be appreciated.

IV

Neural Networks by Stephen A. Boyko A neural network is an interconnected group of artificial and/or biological neurons. A single neuron can be connected to many other neurons, so that the overall structure of the network can be very complex. For example, as globalization combined horizontal market structures with hierarchical firm structures and neural networks, enterprises became three-dimensional orthogonal structures with vertical, horizontal, and perpendicular axes.

Neural networks process information similar to the way human brains do. Networks, composed of countless interconnected elements, enable numerous tasks (multi-task) and numerous users (multi-user) to conduct transactions (process) at any time (multi-periodicity). Neural networks and conventional algorithmic computers complement each other. Tasks of the if-then variety are more suited to neural networks; whereas arithmetic operations are more suited to the algorithmic approach. Learning takes place that increases the effectiveness and efficiency of the network as illustrated by Paul Schumann in Austin, Texas contributing to my management class in Aiken, South Carolina. Winds of Change (September 26, 2005) http://inthenationalinterest.com/Articles/September %202005/September2005Boyko.html Cutting to the Chase, Pace University Business Journal, May 5, 2005, http://appserv.pace.edu/execute/page.cfm?doc_id=15322 http://appserv.pace.edu/emplibrary/BoykoCommentarySpring05.doc Social Security needs realistic ideas Washington Times Letters to the Editor, February 27, 2005 http://www.washingtontimes.com/op-ed/20050226-101209-6684r.htm Ownership Society (January 28, 2005) http://www.inthenationalinterest.com/Articles/January%202005/January2005BoykoPFV.html Exploring Entrepreneurship, Pace University Business Journal, November 15, 2004, http://appserv.pace.edu/emplibrary/GlobalFinanceNewsletterNov04.pdf http://appserv.pace.edu/execute/page.cfm?doc_id=13768 Small is Beautiful, The National Interest, No. 77 Fall 2004. http://www.findarticles.com/p/articles/mi_m2751/is_77/ai_n6353167/print http://germany.usembassy.gov/germany/business_trade_1604.html http://vietnam.usembassy.gov/wwwhircaa.html http://singapore.usembassy.gov/embassy/2005/infoalert_marapr.shtml http://bangkok.usembassy.gov/services/irc/alert/aa200502.htm http://ankara.usembassy.gov/IRC/WHAT/2005/WHATFEB5.htm Comments on Release No. 34-49695, File No. S7-22-04 (June 9, 2004) http://sec.gov/rules/policy/s72204/saboyko060904.pdf http://www.federalreserve.gov/SECRS/2004/June/20040610/OP-1189/OP-1189_1_1.pdf Global Parallels: Proportionate Governance for Increased Commerce (May 12, 2004) http://inthenationalinterest.com/Articles/Vol3Issue19/Vol3Issue19Boyko.html Reality is Contextual: Politics and Economics in the Newly Independent States of the Former Soviet Union (April 14, 2004) http://www.inthenationalinterest.com/Articles/Vol3Issue15/Vol3Issue15Boyko.html http://www.erpic.org/pandi/monarts/cycle11week34.htm Understanding Entrepreneurs (March 31, 2004) http://inthenationalinterest.com/Articles/Vol3Issue13/Vol3Issue13Boyko.html The Governance of Outsourcing (March 17, 2004) http://inthenationalinterest.com/Articles/Vol3Issue11/Vol3Issue11Boyko.html Can Real Regulatory Reform Lead to Job Growth? (February 11, 2004) http://www.inthenationalinterest.com/Articles/Vol3Issue6/Vol3Issue6Boyko.html Politics in an Age of Vilification (December 24, 2003)

http://www.inthenationalinterest.com/Articles/Vol2Issue50/Vol2Issue50Boyko.html Entrepreneurial Exchange (October 2003) http://www.buyside.com/archives/2003/0310/html/0310gst.asp Post-Conflict Economic Transitioning and the War on Terror __Challenges and Solutions (September 17, 2003) http://www.inthenationalinterest.com/Articles/Vol2Issue36/Vol2Issue36Boyko.html Capital and the Small Businessman: A Proposal for an International Entrepreneurial Exchange (May 21, 2003) http://www.inthenationalinterest.com/Articles/vol2issue20/vol2issue20boyko.html Comments on Release No. 33-8041, File No. S7-23-01 (January 29, 2003) http://www.sec.gov/rules/proposed/s72301/saboyko1.htm Odoms Russia, The National Interest, Spring, 2002. http://articles.findarticles.com/p/articles/mi_m2751/is_2002_Spring/ai_85132096/pg_2 GAAMA: A New Perspective for Emerging Markets (Volume IV, Number 2) http://www.spaef.com/IJED_PUB/v4n2.html

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