dead-money
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Post by dead-money on May 2, 2020 10:56:15 GMT
Once you have throughly tested the functionality of the Access Accounts secondary market internally, could we please have reasonable notice of the launch date, so that we can transfer in sufficient funds to hoover up the most heavily discounted loan parts, thanks.
Questions on the mechanics;
If QAA / 30AA / 90AA are all up for sale, do you get to choose which ones to aquire or is everything now QAA given the flat interest rate across all Access Accounts?
Does a 90AA seller have to have served their 90 days notice and be in the withdrawal queue to be eligible to sell their holdings on the secondary market? Or is the secondary market a way to exit without serving notice? Does the buyer than have a 90AA holding on which they have to serve 90 days notice to withdrawal?
Look forward to a comprehensive explanatory guide to the mechanics prior to launch.
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cb25
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Post by cb25 on May 2, 2020 11:50:22 GMT
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dead-money
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Post by dead-money on May 2, 2020 13:04:53 GMT
Yep, I don't see that clarifies the mechanics for notice access accounts.
I'm guessing once 30AA / 90AA withdrawal requests have served notice they join the 'withdrawal queue' at which point a seller can choose to sell at a discount on the 'secondary market' to effectively move up the redemption queue.
A buyer thus acquires an QAA holding at a discount and is free to transfer to 30AA or 90AA for a hoped for future 'improved' 'target' 'capped' interest rate if they so choose.
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cb25
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Post by cb25 on May 2, 2020 13:09:17 GMT
Yep, I don't see that clarifies the mechanics for notice access accounts.
I'm guessing once 30AA / 90AA withdrawal requests have served notice they join the 'withdrawal queue' at which point a seller can choose to sell at a discount on the 'secondary market' to effectively move up the redemption queue.
A buyer is thus acquires an QAA holding at a discount and is free to transfer to 30AA or 90AA for a hoped for future 'improved' 'target' 'capped' interest rate if they so choose.
Hopefully AC will specify in due time whether that's possible and, if not, what stops it occurring as it would seem to be a natural 'play' especially when buying in at a discount. Bit of a win-win, buy at discount, then bump for future higher interest rates.
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blender
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Post by blender on May 2, 2020 13:22:32 GMT
Yes, I think the market will be for queued holdings after notice. Just from the development point of view, it would be a market to bolt on just to queued withdrawals, and not invasive of all the code for managing the access accounts. It becomes QAA held by the buyer.
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gt94sss2
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Post by gt94sss2 on May 4, 2020 11:10:09 GMT
I would be interested to know if the secondary market will only be available while 'not in normal market conditions'
I presume once AC revert to the previous withdrawal system, the need for a secondary market goes away.
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ceejay
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Post by ceejay on May 4, 2020 11:16:25 GMT
I would be interested to know if the secondary market will only be available while 'not in normal market conditions' I presume once AC revert to the previous withdrawal system, the need for a secondary market goes away. Interesting to see that you assume that the status quo ante will return one day. Not sure that I can imagine how that will happen. Remember that the Access Accounts worked only because investors had a high level of confidence that they could have their money back when they wanted it (given notice periods). What would have to happen for that to be true again? If it happens at all, it will be quite some time away, I think. More likely that AC will have to evolve their product set...
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alender
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Post by alender on May 4, 2020 12:31:54 GMT
I would be interested to know if the secondary market will only be available while 'not in normal market conditions' I presume once AC revert to the previous withdrawal system, the need for a secondary market goes away. If/when we return to normal market conditions there will be no need for a secondary market as no one will sell at a discount when they can just withdraw the funds.
From technical viewpoint from my understanding anything on the secondary market is also set for withdrawal will be moved to the cash account at par, also if you tried to enter the secondary (perhaps in the unlikely event you had not noticed it has changed to normal market conditions) you would first have to enter the withdraw queue and and now your funds would be moved to your cash account so you would not get a chance to set a discount.
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dead-money
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Post by dead-money on May 4, 2020 15:08:23 GMT
One would assume it would continue to work as per the MLA does currently; albeit there is a single package of loan holdings to buy or sell rather than individual loans.
So you are free to buy in at par or offer to buy at a discount, subject to available sellers; conversely you can join the withdrawal queue at par or offer to sell at a discount.
So once in place I don't forsee a need to revert to the legacy method, particular if they have gone to the coding effort to provide greater flexibility in the beta site and dropped the legacy site.
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savernake
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Post by savernake on May 4, 2020 15:27:08 GMT
I'm sure many investors bought into the Access Accounts because they didn't want the hassle of trading on a secondary market. They simply wanted a black box account offering automatic diversification with quick access and a fairly stable interest rate.
Of course we are no longer in normal economic conditions now. I applaud AC's attempts to bring some liquidity into the withdrawal queue, but when the world gets back to 'normal' (whatever that may be) having a secondary market as the only way to deposit and withdraw to an 'access account' is likely to confuse and alienate a lot of its target investors.
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puddleduck
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Post by puddleduck on May 4, 2020 16:04:38 GMT
I'm sure many investors bought into the Access Accounts because they didn't want the hassle of trading on a secondary market. They simply wanted a black box account offering automatic diversification with quick access and a fairly stable interest rate. Of course we are no longer in normal economic conditions now. I applaud AC's attempts to bring some liquidity into the withdrawal queue, but when the world gets back to 'normal' (whatever that may be) having a secondary market as the only way to deposit and withdraw to an 'access account' is likely to confuse and alienate a lot of its target investors. I don't think there is any future in the Access accounts, as the illusion of liquidity ('Access') has been shattered. Only way forward I see for any future AC 'black box' type accounts are fixed term accounts, i.e 180 days or 1, 3 or 5 years etc. I think Kuflink probably are a good example to follow here with their auto-invest accounts - there is no expectation of instant access - they run to term, so no kurfuffle.
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alender
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Post by alender on May 4, 2020 16:38:22 GMT
I'm sure many investors bought into the Access Accounts because they didn't want the hassle of trading on a secondary market. They simply wanted a black box account offering automatic diversification with quick access and a fairly stable interest rate. Of course we are no longer in normal economic conditions now. I applaud AC's attempts to bring some liquidity into the withdrawal queue, but when the world gets back to 'normal' (whatever that may be) having a secondary market as the only way to deposit and withdraw to an 'access account' is likely to confuse and alienate a lot of its target investors. I don't think there is any future in the Access accounts, as the illusion of liquidity ('Access') has been shattered. Only way forward I see for any future AC 'black box' type accounts are fixed term accounts, i.e 180 days or 1, 3 or 5 years etc. I think Kuflink probably are a good example to follow here with their auto-invest accounts - there is no expectation of instant access - they run to term, so no kurfuffle. I am not certain how AC has much of a future with its current model (or anything like it), as we all now know there are a lot of commitments made to future tranches of development loans and this would not suit a one off investments that run to term. Also a number of MLA loans rely on AAs for future funding.
If they are to participate in these loan facilities that require future commitments I think they have a real problem as you say the AAs are probably dead with a lot of lenders going away feeling bruised so they would need some innovative schemes to come up with the money. But I cannot think of any or certainly any where I would be prepared to put my money.
Hindsight is a wonderful thing but if we look at the AC accounts I do not think many have been a success. The MLAs seems OK but I am not certain how many investors in the Green energy account or GBBAs will regard them as a success. Now we have the AAs in a situation where to provide access (primally reason for the account) they will have to be sold at a discount. Not sure what next.
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ilmoro
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Post by ilmoro on May 4, 2020 17:09:26 GMT
I don't think there is any future in the Access accounts, as the illusion of liquidity ('Access') has been shattered. Only way forward I see for any future AC 'black box' type accounts are fixed term accounts, i.e 180 days or 1, 3 or 5 years etc. I think Kuflink probably are a good example to follow here with their auto-invest accounts - there is no expectation of instant access - they run to term, so no kurfuffle. I am not certain how AC has much of a future with its current model (or anything like it), as we all now know there are a lot of commitments made to future tranches of development loans and this would not suit a one off investments that run to term. Also a number of MLA loans rely on AAs for future funding.
If they are to participate in these loan facilities that require future commitments I think they have a real problem as you say the AAs are probably dead with a lot of lenders going away feeling bruised so they would need some innovative schemes to come up with the money. But I cannot think of any or certainly any where I would be prepared to put my money.
The fact that you never even noticed that the future tranches were being funded by the QAA (despite it being discussed here previously IIRC) suggests that it isn't really an issue in normal times. The simple answer would be to go back to the original blackbox account with no visibility of individual holdings. That way nobody would be any the wiser that this loan had repaid, or that tranche had been funded, AC could just get on with managing the account to deliver the return. Would also mean that the smart people monitoring free cash wouldn't have been able to pull their funds when it was clear that the liquidity was reducing, accelerating the issues. Most lenders wont be going away bruised, at least not for that reason, as they haven't tried to withdraw their cash so haven't been impacted by the QAA funding tranches ahead of withdrawals.
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alender
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Post by alender on May 4, 2020 17:31:08 GMT
I am not certain how AC has much of a future with its current model (or anything like it), as we all now know there are a lot of commitments made to future tranches of development loans and this would not suit a one off investments that run to term. Also a number of MLA loans rely on AAs for future funding.
If they are to participate in these loan facilities that require future commitments I think they have a real problem as you say the AAs are probably dead with a lot of lenders going away feeling bruised so they would need some innovative schemes to come up with the money. But I cannot think of any or certainly any where I would be prepared to put my money.
The fact that you never even noticed that the future tranches were being funded by the QAA (despite it being discussed here previously IIRC) suggests that it isn't really an issue in normal times. I did not say that I never noticed "these loan facilities that require future commitments", I did, the issue is I did not know how large these commitments are, as I have said I have no idea they would swamp the capital repayments and to make it worse these loans are in the MLA but it is the AAs which pick up these tranches.
If this is as significant as it proved to be why have AC never published a figure for the commitments and explained the bulk (if not all) will be funded from capital repayments from the AAs. AC are meant to be a professional organisation and this should have been so obvious so I was not expecting to be on the hook for anything of this magnitude.
If they had done any stress testing this would be spotted, however if you have access to all the figures, which AC do and we don't, it would have been obvious that this would be an serious issue in a financial crisis even without stress testing. I have worked on the technical and to some extent the business side of investment banking and can assure you this would have stuck out like a sore thumb, I was in charge of decent size project lasting over a year to project all gaps in all asset classes up to 30 years in the future, these accounts would have fallen at the first hurdle.
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blender
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Post by blender on May 7, 2020 9:35:48 GMT
I'm looking forward to this SM. If I could sell my access accounts, then I would not need to. It's obvious but worth making a comparison here. At FC they just close their existing SM and lock in all their retail lenders while they go play a different game to benefit the platform. At AC they create a new SM to provide their retail lenders with improved liquidity options. It's a good idea to judge your platform by how it responds to its lenders in difficult times, rather than when all is, apparently, going well.
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