In today's rapidly evolving financial markets, traditional broker-dealer models are being challenged by innovative technologies that promise to streamline operations, reduce costs, and enhance transparency. Among these groundbreaking platforms is Ohanae, a Web3-powered OTC Market Platform (Ohanae Platform) that is set to revolutionize the way securities are traded and owned. The Ohanae Platform eliminates the need for intermediaries such as broker-dealers, custodians, and clearinghouses, thereby offering a more efficient, cost-effective, and secure alternative to conventional securities trading.
The Traditional Broker-Dealer Model: An Overview
The current securities market infrastructure relies heavily on broker-dealers, who act as intermediaries between investors and the securities markets. These intermediaries are responsible for executing trades, holding securities in custody, and managing the complex processes involved in the buying, selling, and transferring of securities. This traditional model, while ensuring regulatory compliance and market efficiency, introduces several challenges, including delays, increased costs, and reduced transparency.
Broker-dealers typically operate under the Self-Regulatory Organization (SRO) framework, such as the Financial Industry Regulatory Authority (FINRA) or national securities exchanges like the New York Stock Exchange (NYSE) and Nasdaq. These organizations regulate their members, enforce compliance with securities laws, and ensure adherence to rules governing market access and best execution.
Key responsibilities of broker-dealers include:
Intermediary Role: Facilitating the buying and selling of securities on behalf of clients.
KYC Compliance: Maintaining comprehensive Know Your Customer (KYC) information as part of anti-money laundering (AML) regulations.
Custodial Function: Holding securities in "street name," where they are registered in the broker-dealer's name rather than the investor's.
Market Participation: Accessing various trading venues through membership in SROs and exchanges.
Clearing and Settlement: Ensuring accurate settlement of trades through clearinghouses like the Depository Trust & Clearing Corporation (DTCC).
Despite their crucial role in the securities markets, the involvement of broker-dealers and other intermediaries often results in operational inefficiencies, higher transaction costs, and a lack of transparency. This is where the Ohanae Platform steps in, offering a transformative approach that addresses these challenges head-on.
The Ohanae Platform: A New Era of Securities Trading
Ohanae's platform disrupts the traditional broker-dealer model by leveraging Web3 technology to streamline securities markets, eliminate intermediaries, and provide direct ownership to investors. The platform's innovative approach offers several key advantages:
Direct Ownership of Securities:
Unlike the traditional model, where securities are held in "street name," the Ohanae Platform ensures that securities are directly registered to individual investors on the blockchain. This approach eliminates the need for custodians and transfer agents, providing investors with direct ownership and control over their assets.
Blockchain-Based Custody:
Ohanae uses blockchain technology to record ownership and transactions, creating a transparent and immutable ledger. This eliminates the need for traditional custodial services, as the blockchain itself acts as the custodian. The result is a more secure and efficient system for managing securities.
Elimination of Intermediaries:
By removing the need for traditional broker-dealers, Ohanae enables direct transactions between issuers and investors on the blockchain. This not only reduces costs but also increases efficiency by cutting out the intermediary layer. The platform also eliminates the need for escrow accounts and transfer agents, as transactions are automatically settled on the blockchain.
Automated Market Maker (AMM):
Instead of relying on traditional market makers or clearinghouses, Ohanae employs an Automated Market Maker (AMM) mechanism to facilitate liquidity and trading. The AMM allows for continuous trading without the need for intermediaries to match buyers and sellers, further enhancing the platform's efficiency.
Instant Settlement:
On the Ohanae Platform, transactions are settled instantly on the blockchain. This atomic settlement process ensures that the transfer of ownership and funds occurs simultaneously, without delays. The elimination of clearinghouses reduces the risk of settlement failures and accelerates the entire trading process.
Enhanced Transparency:
Ohanae leverages blockchain's inherent transparency to provide a clear and immutable record of ownership and transactions. This increased transparency reduces the need for extensive regulatory oversight of intermediaries, as all transactions are easily auditable on the blockchain.
Cost Efficiency:
By eliminating intermediaries and using Web3 technology, Ohanae significantly reduces transaction costs. Investors can trade securities more efficiently and at a lower cost, making the platform an attractive option for both issuers and investors.
Strategic Focus on Reg A+ and S1 Registration Companies
Ohanae's approach is not only innovative but also strategically designed to accommodate various types of securities, including those under public offerings like S1 registration. The platform begins its journey with Regulation A+ (Reg A+) companies, often referred to as "mini-IPOs," which provide a less complex regulatory environment to validate the technology and processes.
Why Start with Reg A+ Companies?
Strategic Entry Point: Reg A+ offerings allow smaller companies to raise capital from the public without the extensive regulatory burden associated with traditional IPOs. By starting with Reg A+ companies, Ohanae can demonstrate the effectiveness of its platform in a less complex regulatory environment, serving as a proof of concept.
Market Fit: Reg A+ offerings typically involve smaller issuers with limited access to capital markets. Ohanae's streamlined approach, which eliminates intermediaries and reduces costs, is particularly attractive to these companies, helping them raise capital more efficiently.
Expansion to S1 Registration Companies
Future Growth: Once the platform is established and successful with Reg A+ companies, Ohanae plans to expand to S1 registration companies, representing a natural progression. These companies would benefit from Ohanae's ability to offer streamlined, cost-effective capital raising and trading solutions.
Scalability: The platform's ability to scale from Reg A+ offerings to S1 registration companies underscores its flexibility and the robustness of its underlying technology. This scalability positions Ohanae to support a broader range of issuers, eventually catering to larger, more complex securities offerings in the public market.
The Impact of Ohanae on the Securities Market
Ohanae's disruption of traditional broker-dealer intermediaries has far-reaching implications for the securities market. By removing intermediaries, reducing operational inefficiencies, and ensuring real-time transaction settlement, Ohanae is poised to redefine the future of securities trading. The platform's innovative use of Web3 technology offers several key benefits:
Increased Security and Confidence: By providing direct ownership of securities and eliminating the need for intermediaries, Ohanae enhances the security of transactions and boosts investor confidence.
Reduced Costs: The elimination of intermediaries and the use of blockchain technology significantly lower transaction costs, making securities trading more accessible to a broader range of investors.
Greater Transparency: The transparency provided by blockchain technology ensures that all transactions are easily auditable, reducing the potential for fraud and increasing trust in the market.
Faster Settlement: The atomic settlement process on the Ohanae Platform eliminates delays associated with traditional settlement processes, speeding up the entire trading process and reducing the risk of settlement failures.
Regulatory Compliance: Although Ohanae eliminates many intermediaries, it still adheres to regulatory requirements such as maintaining KYC information and ensuring compliance with SEC rules. The platform's design simplifies these processes, reducing the compliance burden while maintaining high standards of regulatory adherence.
Conclusion: Ohanae's Vision for the Future
The Ohanae Platform represents a bold step forward in the evolution of securities markets. By leveraging Web3 technology to eliminate traditional broker-dealer intermediaries, Ohanae offers a more efficient, cost-effective, and transparent alternative to conventional securities trading. The platform's strategic focus on Reg A+ companies and its planned expansion to S1 registration companies demonstrate its scalability and adaptability to different market segments.
As Ohanae continues to innovate and disrupt the traditional securities market infrastructure, it is well-positioned to become a significant player in the evolving financial landscape. The platform's ability to reduce costs, increase transparency, and enhance the security of transactions will likely attract a growing number of issuers and investors seeking a more streamlined and efficient approach to securities trading.
In a world where financial markets are increasingly driven by technology, Ohanae's vision of eliminating intermediaries and providing direct ownership to investors is not just a disruption—it's a revolution. The future of securities trading is here, and it's powered by Ohanae.
Disclaimer
Ohanae Securities LLC is a subsidiary of Ohanae, Inc. and member of FINRA/SIPC. Additional information about Ohanae Securities LLC can be found on BrokerCheck. Ohanae Securities LLC is in discussions with FINRA about exploring the expansion of business lines for the broker/dealer. Any statements regarding abilities of Ohanae Securities LLC are subject to FINRA approval and there are no guarantees FINRA will approve the broker/dealer's expansion.
Ohanae Securities is seeking approval to be a special purpose broker-dealer that is performing the full set of broker-dealer functions with respect to digital asset securities – including maintaining custody of these assets – in a manner that addresses the unique attributes of digital asset securities and minimizes risk to investors and other market participants. If approved, Ohanae Securities will limit its business to digital asset securities to isolate risk and having policies and procedures to, among other things, assess a given digital asset security's distributed ledger technology and protect the private keys necessary to transfer the digital asset security.