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What is an Alternative Trading System (ATS)?

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An ATS is an SEC approved platform – typically hosted by companies which hold a broker/dealers license – offering an alternative to regulated exchanges.  These platforms function to facilitate buy and sell orders among a client base.

Antoine Tardif is the founding partner of Securities.io, the CEO of BlockVentures.com, and has invested in over 50 blockchain & AI projects. He is also the founder of Unite.AI a news website for AI and Robotics, as well as Bitcoinlightning.com a news website focusing on the lightning network.

Forex

EUR/USD Forex Market Rebounds Ahead of US Inflation Figures

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EUR/USD Forex Market Rebounds Ahead of US Inflation Figures
  • American Inflation Figures Due Out Later Today
  • UK GDP Numbers Hurt Pound
  • US Markets Boosted by JPMorgan Earnings

The EUR/USD has recovered slightly on Monday passing through the key 1.13 mark again as the forex market awaits data from US CPI numbers as European industrial production figures cam e in strong. This was not matched in the UK where a GDP slip was matched by weak trading of Sterling. Futures markets in the US meanwhile have been boosted by much better than expected earnings report from JPMorgan Chase even though coronavirus case numbers continue to soar.

Euro Boosted by Positive Data as CPI Figures Awaited

The EUR/USD major market has struggled in trading in the last week. The Euro steadily lost any ground it had gained during the perceived coronavirus recovery and reopening as case numbers continued to bounce back strongly amid fears of a second wave of infections across the US.

This drove many in forex trading, back to the relative security of the US Dollar and as its status as a safe haven currency lived up to the name. Today though, a slight correction has occurred, with the Euro once again positively crossing over the 1.13 trading mark. With only American CPI data due later today, this movement appears to be more in response to positive data coming from the EU with German economic sentiment coming in close to the estimate at 59.3, and industrial production showing strong growth of 12.4% for May.

GBP Trading Slips on Poor GDP

The Pound has been continuing to show weakness against the US Dollar over the same recent period as the Euro, and for many of the same reasons. The UK unfortunately has a couple of additional headaches to add to the mix which have contributed to a more difficult recovery for the currency than their European counterparts. The broadest of these are the Brexit negotiations which continue to drag on, but the one which has cause the latest slip are GDP figures released today.

These numbers came in disappointingly low and well below what had been estimated. The British economy registered a growth of 1.8% in May. This is compared with a projection of more than 5% that had been expected by analysts. Forex brokers noted this poor result as being the likely driver of the GBP/USD further downward where it remains under pressure close to $1.25.

American Markets Set to Open Higher on JPMorgan Boost

The Dow Jones, which gave away gains of more than 500 points to finish yesterday’s trading session just about where it had started, is looking to get back on track today. The index is pointing toward opening gains of more than 150 points despite the fact that COVID19 cases continue to rise in record numbers.

This positivity has largely been garnered by stronger than expected revenue numbers for JPMorgan in Q2. The bank reported revenues of $33 billion, exceeding the $30.3 billion estimate, given the markets, and the banks share price a pre-market lift.

 

 

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Regulation

Abra Fined $300K in Joint Effort by SEC and CFTC for ‘Security Swapping’

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Abra Fined $300K in Joint Effort by SEC and CFTC for 'Security Swapping'

In a joint effort by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), cryptocurrency trading app Abra, and its partner, Plutus Technologies, have been fined $300,000.  The total represents two $150,000 fines, with each being paid to the CFTC and SEC.

The fines were imposed by the two regulatory bodies for “offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a registered national exchange”.  For more information you can review the CFTC order and the SEC order.

A Brief Timeline

While there are instances where companies are blatantly in breach of regulations, the situation involving Abra and Plutus is not as simple.

The issue originally arose over a year ago, when Abra had their first run-in with the SEC.  At the time, Abra offered its clients ‘synthetic exposure’ to U.S. based securities.  This was achieved through Abra providing its clients access to investments, in the form of a contract which mimicked the securities, without actually purchasing the underlying asset.

As a result of offering this service, multiple events took place.

  • SEC identifies Abra security-swapping service as being in violation of regulations
  • Abra shuts down security-swapping, after found servicing U.S. based investors
  • Abra moves various operations to the Philippines
  • Security-swapping services re-launch, with access revoked to U.S. based investors.

Unfortunately for Abra and Plutus, regulators felt that ceasing service for U.S. investors, and moving a portion of their operations to the Philippines, was not enough.  It was found that much of the design and operational aspects of the service, continued to occur within the U.S., making it subject to U.S. regulations.

Representatives from the CFTC and SEC, commented on this.  They touched on how, despite investor restrictions, the rules still apply.

Daniel Michael, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, stated,

“Businesses cannot ignore the registration requirements designed to provide investors with the information necessary to evaluate securities transactions…Further, businesses that structure and effect security-based swaps may not evade the federal securities laws merely by transacting primarily with non-U.S. retail investors and setting up a foreign entity to act as a counterparty, while conducting crucial parts of their business in the United States.” 

The Charges

While both the CFTC and the SEC, were involved in the issuance of these fines, their rulings were independent.  In each case, Abra and Plutus were able to pay the fine, with no admittance to any wrongdoing.  The following were the findings of the regulatory bodies.

CFTC – Abra/Plutus in violation by, “…entering into illegal off-exchange swaps in digital assets and foreign currency with U.S. and overseas customers and registration violations.”

SEC – Abra/Plutus in violation of, “…federal securities law provisions concerning unregistered offers and sales of security-based swaps and requiring that certain swap transactions occur on a registered national exchange.”

Money to Spare

Roughly two months ago, we reported on a $5M investment into Abra, by the Stellar Development Foundation (SDF).  This move caught our attention at the time, because it marked the potential for Abra to eventually foray into the world of stablecoins and digital securities. The SDF has shown an interest in these types of investments, as evident through a similar past investment in security token platform, DSTOQ.

With this fine, it would appear as though Abra was dealing in securities all along – even if they didn’t realize.

Despite having to pay the fines discussed here today, Abra appears unlikely to be phased.  Between the aforementioned investment from the SDF, and others, Abra has raised north of $45M since its creation.

Abra

Founded in 2015, Abra is a crypto-currency investment app, based out of Mountain View, California.  Since its launch, Abra has gone on to become a popular platform for investors.  It provides access and trading support for a bevy of digital assets.

CEO & Founder, Bill Barhydt, currently oversees company operations.

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Blockchains

Vogemann Raises Investment Capital with Its First STO

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Vogemann Raises Investment Capital with Its First STO

The shipping company Vogemann based in Hamburg, Germany issued its first digital security with the help of blockchain technology.

The total issued volume for the security token offering (STO) is 50 million US dollars (USD). The securities sales prospect was approved by the FMA Financial Supervision Authority Liechtenstein on July 3 and the sale had started on July 9.

In its mission to lower CO2 emissions and transition to an environmentally sustainable model, the Vogemann shipping company decided to raise capital for the acquisition of “green” bulker transports.

Digital Security Issuance for Green Ship Tokens

According to the sales prospect, the raised capital will be used to purchase bulk carriers with their own board cranes. Bulkers transport raw materials such as grain, fertilizer, coal, ores, minerals, steel and forest products – this type of transport generating over half of the global maritime transport.

Jens-Michael Arndt, managing partner of H. Vogemann Reederei GmbH & Co. KG, explains the acquisition profile:

“We are particularly targeting so-called ‘Green Ships’. They offer the ideal combination of increased energy efficiency with reduced emission values. This not only makes them more environmentally friendly, but also ensures lower fuel costs and higher charter rates”.

According to Vogemann, worldwide there are currently only two bulkers in the handy-size segment up to 40,000 tons, which meet the highest requirements for CO2 emissions. Both ships of the so-called ‘Green Dolphin’ class were built for Vogemann and were put in service in 2019.

Vogemann’s decision to pursue a digital security issuance aligns with the company’s plan to invest in future-oriented ships.

Markus Lange, managing partner of Vogemann had further reinforced the company’s willingness to try new financing options and the emergence of STOs became a realistic alternative now:

“We have always been open to new financing methods,” “A security token offering is the logical continuation of our financing strategy.”

The digital security was issued under the name Green Ship Tokens. An investment in Green Ship Tokens brings together environmental protection and investment opportunities in the best way.

What is the Green Ship Token?

The Vogemann Green Ship Tokens are digital securities in the form of tokenized profit participation rights with a fixed annual return. The raised capital is invested in new or modern used bulkers, which are employed in the company’s operations.

According to the security offering documentation, the tokenized participation rights exclusively grant contractual creditor rights to the bearer and explicitly no shareholder rights.

From a technical point of view, the issuance of the tokens took place on the Ethereum blockchain. Investors benefit from a fully digitized investment process. While interested investors only need an internet connection to participate, they are still subject to a verification process as accredited investors in accordance with the applied law.

The issuance and investing platform www.greenshiptoken.com is based on Ive.One, which was developed by the Frankfurt-based FinTech Agora Innovation GmbH for digital security issuance with the help of blockchain technology. The capital market regulatory support is provided by attorney Lutz Auffenberg, LL.M. from  Fin Law, Frankfurt, a law firm specialized in the tokenization of financial instruments.

Key data of the Green Ship Token issuance:

Issue volume:

50 million tokens worth USD 1 per token

ISIN:

DE000A2P1QZ6

LEI:

894500T8PAD7RD1QI83

Interest rate:

8% p.a. + plus profit sharing of 50/50 between investors and issuer, insofar as the economic success of the issuer permits.

Minimum investment amount:

USD 1,000

Premium:

2%.

Duration:

Up to 15 years

Investment:

www.greenshiptoken.com

Issuer:

Vogemann Green Ship Token, Hamburg

Coordination/Sales:

Neofin Hamburg GmbH, Hamburg

Trailblazing the Digital Issuance Process

The issuance of the Green Ship Token to raise capital for investment purposes represents a monumental step and could be an example other corporations may follow.

The security issuance is taking place within the applied securities law and is subject to certain verifications, nonetheless the digital issuance process makes it much easier both for issuers and investors.

It’s not yet a fully “open” financing alternative as a couple of countries are barred from participating – most notably USA and China. Still, the issuance on the Ethereum blockchain opens up the investment opportunity to many more investors and enables a much easier trading process.

Will this open the gates for other companies to follow down the same path or is the digital issuance process at this stage not attractive enough for issuers yet?

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