TFTO
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Post by TFTO on Nov 19, 2014 10:30:35 GMT
I have been with AC for long enough to be aware of how things have gone downhill for retail investors. It is fine for those who are happy to pick stuff up on the SM but for those of us with a reasonable sized shadow account the changes made to force us to use AI (it's not manual really) is very annoying and, IMHO, unfair.
I would be very happy to be an underwriter if I had sufficient funds but I can see no reason why the same facility should not be available as long as I pay up on time.
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bugs4me
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Post by bugs4me on Nov 19, 2014 10:31:21 GMT
I can see no reason why retail investors are now excluded from bidding. I should have thought our money was as good as the underwriters. there is no bidding for retail investors anymore. My understanding of the new site is that loans will only be available on the am via setting loan targets and funding the MLIA. If there is a blurring of the distinction between underwriting and investing, as seems to be the case here, it does raise some interesting questions for the retail investor It does appear as though the retail lenders are in the hands of when/if the underwriters decide to place their holdings on the AM. Probably far easier for AC as they did miss several drawdown deadlines although no doubt this was outside of their control but nonetheless tied up management time answering the queries as to why. The AC business model has changed and how much dead money I'm prepared to have sitting around on the off-chance that loan units I'm interested in may become available is another question.
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oldgrumpy
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Post by oldgrumpy on Nov 19, 2014 10:33:02 GMT
"I believe underwriters avoided this problem by only coughing up the actual cash just before drawdown, neatly sidestepping the problem."
Exactly what shadow bids were invented for, and what I did, but apparently that is now against the regulations.
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TFTO
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Post by TFTO on Nov 19, 2014 10:34:08 GMT
"I believe underwriters avoided this problem by only coughing up the actual cash just before drawdown, neatly sidestepping the problem."
Exactly what shadow bids were invented for, and what I did, but apparently that is now against the regulations.
What regulations and how do underwriters get around these?
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bugs4me
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Post by bugs4me on Nov 19, 2014 10:37:32 GMT
I can see no reason why retail investors are now excluded from bidding. I should have thought our money was as good as the underwriters. <snip> '....but there's (as far as I am aware) nothing stopping underwriters holding on to the tastiest loans for themselves....' My sentiments entirely and we, the retail lenders, will probably never be aware of them.
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oldgrumpy
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Post by oldgrumpy on Nov 19, 2014 10:39:30 GMT
AC can only deal as a public P2B platform in cash which has been cleared into their account. By doing private business deals with underwriters they trust to stump up a lot as soon as needed, they can promise a loan knowing the money will be available, but as this does not involve public offerings the regulations are not broken. I think.
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TFTO
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Post by TFTO on Nov 19, 2014 10:45:15 GMT
So, you are saying that some new regulations or other prevents shadow accounts, I wouldn't mind a site of these.
Equally, what is to stop AC doing a deal with retail investors on the same terms - the only difference being the samaller amounts.
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sl75
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Post by sl75 on Nov 19, 2014 10:46:33 GMT
andrewholgate: You referred to this bidder as an underwriter, but they don't seem to be very eager to act like an underwriter and release the units to 'ordinary' lenders. Can you shed any light on this? Has this person decided to keep the whole loan for themself? Underwriters are paid to provide a service to AC. Has this one just taken advantage of the terms available to underwriters and used them to enhance their own return to the exclusion of the rest of us? As I recall, the service that underwriters provide on the "old" site was to step in to provide the balance of the auction that retail investors were unwilling or unable to bid for. Although I'm not privy to the T&Cs relating to underwriters, I don't imagine there was any obligation to subsequently make them available on the aftermarket - although many underwriters would certainly have chosen to do so in order to be able to release the funds for subsequent deals. Possibly that may be different on the new site, where underwriters are the only ones permitted to bid, and retail lenders need some expectation of ever being able to be included... ... however there's another way that AC could easily allow for retail lenders to participate: Once the loan is fully underwritten (but not yet funded), it is made available on the "coming soon" section. This allows retail investors to set a target on it. As the loan reaches the point where it is about to draw down, and underwriters funds are called upon, the system could attempt to create loan units for any retail investor with an active target and available funds. The underwriter would then be required only to fund the difference. For small and/or popular auctions it may be the case that no underwriter funds would be called at all. Such a mechanism would restore the function of underwriters as actually being underwriters rather than initial investors.
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bugs4me
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Post by bugs4me on Nov 19, 2014 10:46:53 GMT
"I believe underwriters avoided this problem by only coughing up the actual cash just before drawdown, neatly sidestepping the problem."
Exactly what shadow bids were invented for, and what I did, but apparently that is now against the regulations.
These were an interpretation of the FCA regulations by AC - the funds had to physically be in the account before they could proceed. AFAIK, shadow bidding covered that as the bids were called in a few days before expected drawdown. What AC have managed to do by having all loan requests fully underwritten is avoid the queries regarding delayed drawdown times from those that never had a shadow bid facility. Also of course it's easier to get those funds in from say 4 or 5 folks rather than several dozen. Now whether those loans hit the AM is another question. There is certainly no obligation on the part of the underwriter to release them.
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oldgrumpy
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Post by oldgrumpy on Nov 19, 2014 10:49:20 GMT
TFTO sl75 Maybe uncertainty on speed of shadowbid collections prevents this being practical.
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TFTO
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Post by TFTO on Nov 19, 2014 10:52:09 GMT
So, all it should need is a promise to pay on time and not to complain on slow drawdown times. Sorted.
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TFTO
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Post by TFTO on Nov 19, 2014 10:54:46 GMT
TFTO sl75 Maybe uncertainty on speed of shadowbid collections prevents this being practical. I always paid as soon as soon as I saw email. If others were slow in paying then AC could just have removed their shadow facility. TBH, it is a load of c**p and just allows several wealthy individuals to take the cream.
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oldgrumpy
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Post by oldgrumpy on Nov 19, 2014 10:57:10 GMT
TFTO sl75 Maybe uncertainty on speed of shadowbid collections prevents this being practical. TBH, it is a load of c**p and just allows several wealthy individuals to take the cream. Me too, (months ago and North Wales and Worcester still haven't drawn down .... the former may never do so).
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TFTO
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Post by TFTO on Nov 19, 2014 11:02:16 GMT
I'm in the latter and patiently waiting for drawdown. I wonder if the underwriters have forked out yet?
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sl75
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Post by sl75 on Nov 19, 2014 11:02:01 GMT
TFTO sl75 Maybe uncertainty on speed of shadowbid collections prevents this being practical. There's no such concern with what I proposed. In that scenario, loan units are created for retail investors WITH FUNDS AVAILABLE. The rest is covered by underwriters (who will have to be prepared collectively to underwrite the entire amount anyway). Retail investors with a target could perhaps be given a heads up that the loan will be drawing down soon to allow them to provide funds to meet the demand (whether as new funds or by adjusting other targets to release funds from existing loans), giving the equivalent functionality to shadow bidding (for those who were "well-behaved"), but without the auction effectively being held to ransom by a relatively insignificant retail shadow bidder who is slow in getting their funds available. Under that scenario, even if one of the "real" underwriters is slow in getting their funds together, the auction is effectively oversubscribed (X% retail bid targets turned into loan units + 100% underwriter bids), so any underwriter whose stake was less than X% and who is slow in providing funds can be taken out solely by calling on existing commitments by other underwriters.
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