The following will replace the Federal Reserve Act in its entirety and provide procedures to safeguard the stock market. Though it can't prevent stock fraud, it will go a long way to curb it from happening. Also, it provides a method for assisting small businesses and corporations.
Section 1. Mission
The Finance Commission Act establishes the Finance Commission (FC) whose purpose is to provide the Commonwealth with a safe, flexible financial system.
Section 2. Requirements
The FC will be headed by a Chairperson who is appointed by the
President and confirmed by the Chamber of Deputies or Senate when it is formed. (See Attachment A for Chairperson's oath of acceptance.) Once appointed the Chairperson may only be removed from office at the request of the President and a majority vote in the Chamber (or Senate). In the interim, between notification from the President and voting by the Chamber (or Senate), the Chairperson will be suspended. The responsibilities normally provided by the Chairperson may be assumed by the Manager, Bank of Cyberia (Bank) or a temporary Chairperson identified by the President. These responsibilities include:
A) Determining the rate of interest to be charge on short-term and long-term notes from the Bank;
B) Oversight of the Cyberian Stock Exchange and economic indicators;
C) Overseeing the investment portfolio (stocks, bonds and other
investments) of the Commonwealth insuring limited risk to meet its obligations;
D) Approving policies and procedures to be followed by the Bank and registered businesses which will be issued periodically as Notifications;
E) Assist in developing the Budget of the Commonwealth on a yearly basis and providing actual expenditures;
F) Oversight of the Bank and performing periodic audits of its
operations; and
G) Maintain a high degree of professionalism and ethics in all
dealings.
The Chairperson will be unable to hold another public office while performing his/her duties. There will be a minimum of three
board members including the Chairperson. Other members may be chosen by Chairperson and may hold other political offices
provided they pledge an oath of non-partisanship when enacting their duties on FCC. (See Attachment B for oath of acceptance.)
Section 3. The Bank of Cyberia
The purpose of the Bank is to carry out the duties specified by the FC. The Bank will be headed by the Chairperson of the FC or the Bank Manager, who is appointed by the President and confirmed by the Chamber of Deputies or Senate when it is formed. An Assistant Manager may be named by the Manager if he/she deems it necessary. Once appointed the Manager or
Asst. Manager may be fired at will by the President. The primary
responsibilities of the Bank are:
Section 3.1. Registration of Businesses and Companies
There are five forms of businesses in Cyberia:
A) Sole Proprietors and Partnerships neither which involve the
selling of stock.
B) Corporations which are publicly-owned and traded on the Cyberian Stock Exchange.
C) Worker-owned corporations in which all employees share in the
distribution of stock and the benefits of profits earned.
Worker-owned corporations may not be publicly traded on the Cyberian Stock Exchange.
D) Government-owned businesses which do not issue stock but raise
capital through federal tax dollars or bond issuance. Bonds are sold and exchanged through the Bank and listed on the Cyberian Stock Exchange. For simplicity in the simulation, bonds will not be sold at a premium nor discount until an Amendment to this Act is issued.
D) Non-profit organizations known as formal groups, who do not
accumulate profits for the benefit of the organization but use the proceeds for the betterment of mankind. Non-profit organizations are not required to pay income tax, but must register with the Bank and provide evidence of their non-profit
status.
The Bank shall be responsible for maintaining the registration list of all businesses operating in the Commonwealth. Registration fees are set at ~500 per business. The Bank is also required to maintain a list of all active businesses.
If a business intends to trade stock on the Cyberian Stock Exchange, the Ticker Identification will be issued by the bank at the time of registration.
Section 3.2. Commitment to Businesses
The Bank shall, on request, assist businesses and non-profit
agencies on completing basic financial statements. The Bank shall
accept loan requests. Small business loans at lower interest rates
are available on a limited basis.
Section 3.3. Maintaining the Cyberian Stock Exchange
Until this Act is amended, the Bank shall be the only brokerage
service in the Commonwealth. This service will provided
without charges for commission and transaction fees.
The Bank shall be responsible for the actual issuance and redemption
of all stocks and bonds, including the exchange of
moneys, involved in the transactions. For each block of stock or
bonds issued, a Cyberian Serial Number (CSN) will be
assigned for tracking purposes. Buyers will be responsible for
managing their own portfolios, including the investment
purchased along with the CSN, including the number of shares, and
the cost. The Bank will notify buyers and sellers when a
transaction is completed.
The Bank shall also maintain and administer the investments of the Commonwealth at the direction of the FC Chairperson.
This does not absolve the Bank Manager from having a fiduciary duty
for the investments of the Commonwealth, though
he/she shall be liable to a lesser degree. The Asst. Manager, if
appointed, shall not be held liable for investments of the
Commonwealth.
Section 3.4. Collection of Federal Income Tax
Businesses are required to make their quarterly tax payments to the Bank. The Bank is responsible for establishing and
maintaining the accounts for each business to which they deposit the
funds. The moneys and accounts shall not be
co-mingled.
Section 3.5 Savings and Money Market Accounts
The Bank shall deposit money earned into Money Market Accounts
established at the time the investor first begins transacting
on the exchange. In addition citizens or businesses of the
Commonwealth may open a personal savings account. The rate of
interest paid on the accounts will be determined by the FC.
Section 3.6. Reporting Requirements
The Bank shall provide the President and the FC with a consolidated
report to include the number of shares outstanding per
company and on investments made for the Commonwealth upon request
and formally at the end of each month.
Section 4. The Currency of Cyberia
The currency of Cyberia will be entitled Cy and represented by the symbol ~. One Cy equals approximately sixty-nine cents
of U.S. currency. Fluctuations in the value of the currency will be
announced by the FC.
Section 5. The Cyberian Stock Market
Businesses which intend to sell stock will be required to determine
the number of shares to be issued in the initial public
offering. The history of Cyberia shows this number to be around
500,000 though each business must take into account the
amount of capital they need along with the opening price per share.
The opening price is the amount management believes they
can get for a share of their stock on the open market and is backed
by the assets of the company.
Section 5.1. Stock Prices
The price of stock is affected by many factors. For simulation
purposes the price of stock will go up or down by 1 point per
the following:
A) Stock price below ~30 per share will go up or down a point for
every 1,000 shares purchased or sold.
B) Stock prices between ~30 and below ~75 will require movement of 3,000 shares to go up or down.
C) Stock prices between ~75 and below ~200 will require movement of 5,000 shares to go up or down.
D) Stock prices of ~200 and up will require movement of 10,000 shares to go up or down.
The price of stock is further affected by stock splits, the
corporation buying back their stock, profits, and dividends paid.
A) A stock split will divide the price of the stock by the ratio of
the split.
B) The announcement of profits will result in a 2 point increase for
every 5 percent of profits and decrease for each 5 percent
decrease from the base number. The base is a projection made by the
management of the company at the start of each
quarter.
C) The announcement of dividends paid will result in a 5 point
increase.
Other impacts on stock prices will be determined by the FCC and
affected as directed.
Section 5.2. Indices
The overall change in the Cyberia Stock Exchange (CSE) will be
reported weekly. In addition there is one index being
tracked in Cyberia, the Cyberian Technological Index (CTI). An index
may be started by a request to the Bank by a group of
businesses in similar fields, by the President, or FC.
Section 5.3. Control for Simulation Purposes
For purposes of the simulation the President may purchase 3 percent
of all stock offered for sale. The Bank shall purchase 7
percent of all stock offered for sale in an effort to spur the
economy and for investment purposes for the Commonwealth. The
Chairperson of the FC may override purchase by the Bank in the event
he/she judges the risk factors to be too great for the
Commonwealth to bear.
Attachment A - Chairperson's Oath of Acceptance
I …(name)…do solemnly affirm to protect the interests of the
Commonwealth of Cyberia and faithfully execute my duties in
the highest of ethical standards and with a professional demeanor I
further acknowledge the fiduciary responsibilities I have to
the citizens and the Commonwealth. I affirm my decisions will not be
affected by my political beliefs but rather on firm, sound
economical principles.
Attachment B - Member Oath of Acceptance in the Finance Commission
I…(name)…do solemnly affirm to protect the interest of the
Commonwealth of Cyberia and faithfully execute my duties as
delineated by the Chairperson of Finance Commission Committee in the
highest of ethical standards and with a professional
demeanor. I affirm my work on the Committee with be conducted in a
non-partisan manner.
Notification No. 627 to Businesses and Corporations
Bank of Cyberia
Definitions: Gross Profit is defined as the amount by which revenue
from sales exceeds the cost of good sold.
Profit Margin is a company's ability to earn a net income from
sales. It is measured by expressing net income as a percentage
of sales. Hence: Net Income divided by Net Sales
For clarification and consistency when determining profit, the Bank
of Cyberia will require as a minimum:
