ceejay
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Post by ceejay on Jun 21, 2018 7:54:12 GMT
>>>If people decide to withdrawal at once and cannot it will affect confidence. I think that is a when not an if! But as we are all savvy investors we all know that at some point in the cycle there will be a run, and of course as savvy investors we won't turn on Assetz and blame them will we??? Jack P ... and the same is true of the very large majority of P2P investments: if you want your money back in less than the loan term, you run the risk of there being no active market and therefore not being able to exit.
One way to substantially reduce this risk is to lend only on relatively short loans: if the secondary market disappears, you just have to wait for the loan to run its course.
But a way to somewhat reduce the risk is to invest via a fund which maintains a significant cash buffer, as QAA and 30DAA do. It won't do much if there is a major run, but it's presence should reduce the chance of someone being disappointed and therefore the run forming in the first place.
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puddleduck
Member of DD Central
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Post by puddleduck on Jun 21, 2018 8:21:58 GMT
I'm pretty sure I heard / read somewhere the cash buffer on the access accounts is 40%.
Should there be a run on the accounts, I think there is probably enough margin for Assetz to increase interest rates further to attract new funds and maintain liquidity.
Personally I think a run will be triggered not by world wide economic events, but rather closer to home if the FCA decide to look at platforms where seemingly the majority of loans are non-performing. That can only be a matter of time.
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mary
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Post by mary on Jun 21, 2018 8:36:23 GMT
I'm pretty sure I heard / read somewhere the cash buffer on the access accounts is 40%. Should there be a run on the accounts, I think there is probably enough margin for Assetz to increase interest rates further to attract new funds and maintain liquidity. Personally I think a run will be triggered not by world wide economic events, but rather closer to home if the FCA decide to look at platforms where seemingly the majority of loans are non-performing. That can only be a matter of time. The buffer cannot be anywhere near 40% as the buffer is earning zero, my guess is less than 5%. When asked the size of the buffer Assetz have failed to respond.
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sl75
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Post by sl75 on Jun 21, 2018 10:49:02 GMT
The buffer cannot be anywhere near 40% as the buffer is earning zero, my guess is less than 5%. When asked the size of the buffer Assetz have failed to respond. The balance of the account that IS invested in loans can be relatively easily determined using the "your loan holdings" on the QAA or 30DAA. At about 7:45 this morning, my loan holdings totalled 95.82%, and by 10:45 this had risen to 96.14%. The main reason seems to be that the total balance of all investors funds in the QAA fell by about £0.5M in the same time (with £0.06M going into the 30DAA, so a net difference of £0.44M), but over the same time period my calculations suggest that the investment engine behind the QAA and 30DAA had only managed to sell about £0.04M of loan units, causing the implied cash buffer to fall by £0.4M from £5.05M to £4.65M. It seems that yesterday's email reminding investors of the new higher rates has had the opposite effect to that intended in the short term - causing more investors to pull cash out (perhaps due to the prominent risk warning) than to add funds. In the last hour since then it recovered slightly, with more funds being added to the 30DAA than were removed from the QAA, but the "visible" element of the cash buffer still seems quite low to me. Overall trend in the last few weeks, however, has been for an increase in the funds invested in those accounts - the only reason for the dwindling cash buffer seems to be that AC are letting new loans draw down even faster, so I'd guess their first defence if they thought the cash buffer was about to get too low to continue normal market conditions would simply be to delay or cancel drawdown of loans that would take the cash buffer dangerously low... as new loans are still drawing down and being allocated funds from the QAA, I can only assume they do not consider this a problem yet.
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