alanh
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Post by alanh on Apr 2, 2020 17:42:20 GMT
The secondary market in the QAA would not involve the breaking down into underlying constituents, it would simply be the transfer of one investors QAA holding to another at a certain price. Investor A has £10000 in QAA and wants out Investor B wants to buy for £7000 Investor A's QAA holding of £10k nominal is transferred to investor B for £7000 i.e a 30% discount or whatever the secondary market price is Whilst you say the cost of liquidity can be significant, that is for the market to decide. Some people think that everything is completely fine and they will get 100% of their investment back, others think that AC are finished and are expecting a near 100% loss. As with anything, the truth will be somewhere in between. I’m not aware of any plans for AC to introduce discounted exits from QAA invested amounts so I personally see little point discussing it. There have been postings implying converting AA amounts into underlying MLA is being looked into hence my comment. It is being discussed as a simpler way of allowing secondary market trading in QAA holdings as opposed to the alternative of breaking the holding down into 600 odd loan parts and then having to go into each individual loan and set up a sell order.
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jo
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Post by jo on Apr 2, 2020 17:48:04 GMT
Agreed alanh If you close your eyes you can almost imaging why humans invented a system for exchanging stuff that matched both sides' needs, motivations, and perceptions. Pity it didn't catch on - oh wait, it did.  |
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Post by Harland Kearney on Apr 2, 2020 17:56:34 GMT
I have a feeling AC would avoid a QAA discount system, it will likely be high and could cause more investors to withdraw. (or put in a order) Not saying they shouldn't, I think I would sell partially via this, and it give back investors who are desperate to get the cash back a channel to do so. It doesnt' seem that practical though, not from a access account stand point. Unfontunely if you wanted out it should of been once the virus hit the UK, too late now. It's gonna be a long wait. (as might make sense for the asset class?) Sit on hands, stop doing something and do nothing. Unless of course AC did allow a discount  Really wish AC did a better job at Commuicating the past 15 days, its been a real mess. As others have pointed out in other threads too, they will be tapping into other income streams to fund loans in the future as well keep the company itself afloat. QAA better not turn into GBBA 3 after this lockdown crisis  |
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alanh
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Post by alanh on Apr 2, 2020 18:00:06 GMT
I have a feeling AC would avoid a QAA discount system, it will likely be high and could cause more investors to withdraw. (or put in a order) Unfontunely if you wanted out it should of been once the virus UK, too late now. It's gonna be a long wait. (as might make sense for the asset class?) Sit on hands, stop doing something and do nothing. Unless of course AC did allow a discount Really wish AC did a better job at Commuicating the past 15 days, its been a real mess. As others have pointed out in other threads too, they will be tapping into other income streams to fund loans in the future as well keep the company itself afloat. QAA better not turn into GBBA 3 after this lockdown crisis One investor withdraws another one buys in. There is no net change to the funds on AC. I see no reason for them to want to avoid a QAA discount system. Secondary markets exist on many platforms and also on AC in the form of the MLA itself. Why would they want to avoid it?
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Post by Harland Kearney on Apr 2, 2020 18:07:26 GMT
I have a feeling AC would avoid a QAA discount system, it will likely be high and could cause more investors to withdraw. (or put in a order) Unfontunely if you wanted out it should of been once the virus UK, too late now. It's gonna be a long wait. (as might make sense for the asset class?) Sit on hands, stop doing something and do nothing. Unless of course AC did allow a discount Really wish AC did a better job at Commuicating the past 15 days, its been a real mess. As others have pointed out in other threads too, they will be tapping into other income streams to fund loans in the future as well keep the company itself afloat. QAA better not turn into GBBA 3 after this lockdown crisis One investor withdraws another one buys in. There is no net change to the funds on AC. I see no reason for them to want to avoid a QAA discount system. Secondary markets exist on many platforms and also on AC in the form of the MLA itself. Why would they want to avoid it? Ask them? Like everything on here its speculation.
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rogedavi
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Post by rogedavi on Apr 2, 2020 18:49:04 GMT
Part of the reason a run was inevitable on all these p2p sites that dont offer a proper secondary market is because loans are effectively offered (and bought) at par.
Once investors see anything that suggests the loans are worth less than par (+ interest), they'll ask for their money back en masse. Be that a result of higher than expected default rates, lower recoveries, fraud, economic shock/recession.
A proper secondary market puts the brakes on this by naturally adjusting the price to meet supply and demand. All of the folk who want to sell out their holdings, probably wouldnt want to at 50p on the pound. They might at 90p. Of course they all want to right now at 100p. Its no different to giving everyone an option to sell the S&P500 at the 3400 peak. Its going to work when the market is trending upwards, but not when its trending downward.
Where would new investors be interested to buy at? - thats all part of price discovery process. We just dont know without a functioning market. Trying to attract investors right now sadly just isnt going to work without giving them a return which compensates them for the additional perceived risk. Do that ad you'll get a lot more new money coming in, if the effective yield to maturity on the account is not 5% but 10% say due to the discounts being offered by sellers. Promotional offers kind of do this but again its an arbitrary price so no one really knows if thats attractive or not until its tested. Id wager the 1% on offer is doing nothing right now (and offset by the new fee anyway...). The only platforms that have nailed this imo are ABLRate (although the capping/flooring is a bit artificial) and WiseAlpha (its a TRS on the bond so the market price is known already). The rest of the P2P platforms havent gotten their head around what is a pretty basic concept.
With a proper secondary market there should be no liquidity crisis as the buyers will match the sellers at whatever the clearing price is at that time. Im shocked that FC are yet to adopt this approach and I would be very supportive of the Assetz xAA products simply being treated as what they are (securitizations) and being priced as 100/100 in normal market conditions, and lets buyers and sellers bid/offer in a real secondary market.
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Post by df on Apr 2, 2020 19:07:32 GMT
I agree with alanh - zero returns is more than a tad pessimistic. travolta - can we ask why you feel so strongly that way? Do we have any recovery statistics for the platforms that have collapsed? I think I am right in saying that Collateral have returned nothing and that went down 2 years ago. What about Lendy or Funding Secure? Does anyone have a feel for what the recovery rate is/might be on those? My feel for Ly and FS is around 50% or less, but it worth nothing because we simply don't know until the recoveries are over. This also very much depends on the individual portfolios (e.g. if all of your funds are in "the Art Work" and racing cars, you're most likely to have a total loss of your capital). Yes, we have passed the second anniversary of Col collapse and BDO hasn't return a penny to investors so far and there was no recent communication. The only comfort for me is that a fair proportion of my funds were in pawn, otherwise I have no idea what percentage of loss to expect.
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agent69
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Post by agent69 on Apr 2, 2020 19:09:39 GMT
I have a feeling AC would avoid a QAA discount system, it will likely be high and could cause more investors to withdraw. (or put in a order) Not saying they shouldn't, I think I would sell partially via this, and it give back investors who are desperate to get the cash back a channel to do so. It doesnt' seem that practical though, not from a access account stand point. Unfontunely if you wanted out it should of been once the virus hit the UK, too late now. It's gonna be a long wait. (as might make sense for the asset class?) Sit on hands, stop doing something and do nothing. Unless of course AC did allow a discount Really wish AC did a better job at Commuicating the past 15 days, its been a real mess. As others have pointed out in other threads too, they will be tapping into other income streams to fund loans in the future as well keep the company itself afloat. QAA better not turn into GBBA 3 after this lockdown crisis You would have thought that on the bookshelf behind Stuart Law's desk there would be a manual with the words "Assetz Capital - procedures to be adopted outside normal market conditions" emblazened on the cover. Unfortunately, you get the impresion that as of 3 weeks ago nobody at AC had given this a lot of thought. Their actions since then come across as making policy on the hoof.
It doesn't bode well for the future
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ian
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Post by ian on Apr 2, 2020 20:32:59 GMT
I have a feeling AC would avoid a QAA discount system, it will likely be high and could cause more investors to withdraw. (or put in a order) Not saying they shouldn't, I think I would sell partially via this, and it give back investors who are desperate to get the cash back a channel to do so. It doesnt' seem that practical though, not from a access account stand point. Unfontunely if you wanted out it should of been once the virus hit the UK, too late now. It's gonna be a long wait. (as might make sense for the asset class?) Sit on hands, stop doing something and do nothing. Unless of course AC did allow a discount Really wish AC did a better job at Commuicating the past 15 days, its been a real mess. As others have pointed out in other threads too, they will be tapping into other income streams to fund loans in the future as well keep the company itself afloat. QAA better not turn into GBBA 3 after this lockdown crisis You would have thought that on the bookshelf behind Stuart Law's desk there would be a manual with the words "Assetz Capital - procedures to be adopted outside normal market conditions" emblazened on the cover. Unfortunately, you get the impresion that as of 3 weeks ago nobody at AC had given this a lot of thought. Their actions since then come across as making policy on the hoof.
It doesn't bode well for the future
Their actions discriminating against bigger lenders, increasing their margins, and imposing forbearance will I suspect lead to at least one larger investor issuing an injunction to cease all repayments or to apply for an asset restriction. They have completely lost the plot and seriously need to start managing exit of funds in an equitable manner & treating borrowers firmly but fair.
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Mikeme
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Post by Mikeme on Apr 3, 2020 7:44:33 GMT
This virus that is killing many with millions working hard to try to keep it in control. It is indiscriminate and affecting ALL people. Why should those that have most not share the pain? The actions AC have taken ARE PROPORTIONAL . In addition to that by AC looking forwards to when this ends will help the whole country. I applaud their forward thinking.
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mrsb
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Post by mrsb on Apr 3, 2020 8:07:21 GMT
Proportional to what? (There has to be something on both sides to establish proportional-ness.)
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 3, 2020 8:15:20 GMT
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Mikeme
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Post by Mikeme on Apr 3, 2020 8:42:15 GMT
Proportional to what? (There has to be something on both sides to establish proportional-ness.) Proportional to the risk of Corvic 19. The basis of the decisions made by AC.
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iRobot
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Post by iRobot on Apr 3, 2020 8:54:45 GMT
Must have been a quiet day in the office....what made me laugh is these guy's don't like you sharing their content, but they've had to com here for "news".
Guess nothing is fair in love and war. LOL
Didn't even bother reaching out to AC for comment, by the looks of it. Lazy. Very, very lazy.
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benaj
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Post by benaj on Apr 3, 2020 8:56:09 GMT
Must have been a quiet day in the office....what made me laugh is these guy's don't like you sharing their content, but they've had to com here for "news".
Guess nothing is fair in love and war. LOL
I believe that particular particle is free to view, not the other stuffs
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Really wish AC did a better job at Commuicating the past 15 days, its been a real mess. As others have pointed out in other threads too, they will be tapping into other income streams to fund loans in the future as well keep the company itself afloat.
