alender
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Post by alender on Apr 27, 2020 15:54:13 GMT
Now then. The actual discounted worth of the QAA loan holdings, that will be an interesting one. What happens though if someone with no current QAA holdings were to, say, buy just £100 of the QAA at a 5% discount in their freshly minted QAA? In the current bottom-up payout mechanism, they would have their holding relatively quickly redeemed at par when the handle is cranked and make a quick fiver plus a bit of interest. That really doesn't seem fair, so would the mechanism be changing to proportional alongside this change? If the answer is "we hadn't thought of that" ..... This is the point I raised when this was first muted.
From my previous post
If a secondary market was made for AA there would have to be strict rules about withdrawals/interest otherwise the AA holders who are in the pool for payments would be worse off.
Let say B Lender needs cash, he has £200,000 in the QAA pool for payments, less now is coming out as no new money entries the AA accounts because you can buy in at a discount. He can't wait so he sells £100,000 at 20% discount.
Then 80 small lenders buy £1000 each.
They all request withdrawals (why not, when paid out 25% profit + interest while waiting) therefore the withdrawal pool has 80 new people, the small lenders gets out quite quickly due to the disproportionate payment system. Not only has B Lender lost £20,000 but he payouts decrease due to the new entrants in the pool. When the the small lenders are paid out they get £1250 + interest, they will think I like this game, I will do it again.
At the very least these discounted accounts must be subordinate to money currently in the AA and must not be paid out during this or any future liquidity events, perhaps interest can also be withheld while a liquidly event is in progress.
If no restrictions are in place it will accelerate the reduction in quality of the loan book of any large lender as they will be get less money out and will end up with more bad loans.
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victors
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Post by victors on Apr 27, 2020 16:01:04 GMT
I think this is a good move by AC to add a secondary market to the QAA.
At least they are increasing lender options.
Also, I would be more inclined to invest in an access account with a secondary market.
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alanh
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Post by alanh on Apr 27, 2020 16:16:00 GMT
Did some back of the spreadsheet calculations. sigma [ minimum (AAH, PAR-OFFERED-ON-SM) ] = £74.6m. where AAH is the access account holdings in a loan. On that basis the access accounts have between £0 and £74.6m for sale on the SM. Looks like we get similar numbers. Using yours, and a maximum of £74.6m for sale out of £215m in the access accounts that means a maximum of 34.7% of the access accounts is for sale Taking 34.7% of the £54m in the queue = £19m. I made it £21m. So using a maximum double counting of £20m for the access exit queue implies that the total amount of the loan book looking to exit the platform is between £117m and £137m
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Post by oppsididitagain on Apr 27, 2020 16:19:26 GMT
1. Will you remove the 2% fee youre now charging people and charge a fee to transact in a 2 tier QAA instead ?
2. Why don't you quash the speculation on these forums Stuart and tell us, upto the 31.03.2020, how much was requested to Exit the QAA,30/90AA accounts ??
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Post by Harland Kearney on Apr 27, 2020 16:20:48 GMT
1. Will you remove the 2% fee youre now charging people and charge a fee to transact in a 2 tier QAA instead ? 2. Why don't you quash the speculation on these forums Stuart and tell us, upto the 31.03.2020, how much was requested to Exit the QAA,30/90AA accounts ?? What 2% fee?
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Post by oppsididitagain on Apr 27, 2020 16:26:50 GMT
Sorry , my mistake its .9%.
We are commencing a lender loan servicing fee of 0.9% per annum, which is 0.075% per month of the loans under management, starting on 1st May."
2% is on lending Works I believe
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Post by Harland Kearney on Apr 27, 2020 16:29:33 GMT
yes 0.9% yearly.
If you sell at a discount, non of that fee is going to the platform rather your buyer. Its a sale between seller and buyer, no platform involved in terms of discounts. (from what has been said so far in this thread)
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ilmoro
Member of DD Central
'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 27, 2020 16:38:38 GMT
Ok. First of all the £83m includes sums being released by the access accounts so its not £83m +£54m, its just £83m. Second much of the £83m has been available since the loans drawdown as the access accounts always make the bulk of their holdings available on the market as part of the day to day account operation so the £83m isn't evidence of the sums looking to leave the platform. Third RMs point - selling isnt leaving Fourth stuarts post references investors, not cash so no value can be extrapolated from that statement as 25% could represent any % of the cash Fifth, withdrawal requests isn't defined, does it include requests to exit the accounts to invest in MLA, requests to exit the QAA to invest in 90DAA/30DAA or any permutation of inter account transfers so again nothing can be extrapolated from this statement Edit Sixth CBs point Your double counting argument is incorrect and its very easy to see why. You are assuming that every single penny of the £54m access account queue is up for sale in the £83m number. This is incorrect. For starters, 13.1% of the access account holdings are suspended and are untradeable - thats £7.1m not double counted Of the remaining £46.9m, if you analyse the loanbook you will see that the amounts for sale on many loans are less than the holdings in the access accounts. Calculating the excess remaining in the access accounts gives another 48% of the loanbook = £25.9m not double counted. So that makes £33m certainly not double counted. The remaining £21m has amounts for sale that are greater than the access account holdings in the respective loans. Some of this may come from the access accounts, some not. That gives a potential double counting range between zero and £21m. Fair point. I made a daft assumption 
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jcb208
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Post by jcb208 on Apr 27, 2020 16:54:30 GMT
So anyone who has just invested in the QAA like me at a much reduced interest rate up to now and stuck in a non moving queue ,unless we offer a discount we will never get our money back as we will just keep going backwards in the queue ,Sorry to say this but the proposition Stinks and not happy with it chris. |
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IFISAcava
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Post by IFISAcava on Apr 27, 2020 16:54:33 GMT
I think this is a good move by AC to add a secondary market to the QAA. At least they are increasing lender options. Also, I would be more inclined to invest in an access account with a secondary market.At par? With no exit route at par for the forseeable future?
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IFISAcava
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Post by IFISAcava on Apr 27, 2020 16:59:49 GMT
Now then. The actual discounted worth of the QAA loan holdings, that will be an interesting one. What happens though if someone with no current QAA holdings were to, say, buy just £100 of the QAA at a 5% discount in their freshly minted QAA? In the current bottom-up payout mechanism, they would have their holding relatively quickly redeemed at par when the handle is cranked and make a quick fiver plus a bit of interest. That really doesn't seem fair, so would the mechanism be changing to proportional alongside this change? If the answer is "we hadn't thought of that" then just take a quick look at the picture below and I'll delete this post.  Some us had. Grrr. Anyway, the degree of discount will be priced into the proportional liquidity available to exit. A few thousand people may take a small amount to do the above - perhaps also using different accounts - but that would soon be used up and then you'd have to discount more to sell more. No need to change the exit route.
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Post by Harland Kearney on Apr 27, 2020 17:01:46 GMT
I honestly don't know how to feel.
Be interesting to see whats next, but my interest is one more of fear and caution than that of optimism. I'd settle for a discounted rate to reduce my exposure (already in queue.
Still be leaving a portion of funds invested in my ISA for the foreseeble future.
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alanh
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Post by alanh on Apr 27, 2020 17:03:58 GMT
The smart MLIA lenders are probably going to make a killing at the expense of the ignorant, possibly desperate, QAA “savers”. Over time, the Access accounts will be left with the dross that no one wants and they will collapse. Not really sure this is going to pass the transactions should be made at fair value FCA stipulation either. Not that I can think of any better solutions... I don't believe they are intending this to have anything to do with the MLA. It is simply a transfer of QAA holdings from one investor to another, doesn't touch the MLA.
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Post by investor01010101 on Apr 27, 2020 17:04:30 GMT
It took me less than a second to notice the assumption in that statement above. EDIT: Seriously, nobody likes where we are at the moment, but very few are taking every last pot shot at AC that they can, and shouting about it from the rooftops. At the least, if you are going to put the boot in, please do it accurately and without the use of assumption. It's getting old, fast. You haven't considered the loans with credit events which is probably a significant sum the "won't" be leaving the platform. What I have learnt with my time in AC is they don't care who they lend to and don't care about how long it takes to get the money back, hence 98% of my loans are in credit events and I have not received more than £5 back in payments from AC in nearly a year. Its no wonder people want out.........
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chris1200
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Post by chris1200 on Apr 27, 2020 17:05:16 GMT
So anyone who has just invested in the QAA like me at a much reduced interest rate up to now and stuck in a non moving queue ,unless we offer a discount we will never get our money back as we will just keep going backwards in the queue ,Sorry to say this but the proposition Stinks and not happy with it chris . I really think this is an important point. As I mentioned above, the effect is for access account holders to retrospectively be lumped with much of (but, admittedly, not all of) the risk of an MLA account but without having had the higher interest rate all this time. Also, what role would the provision fund play in these circumstances? The underlying reason for the discount would be higher expected levels of defaults (this, ultimately, is what drives liquidity). If you sell out at a discount, you're basically sacrificing your provision fund entitlement for that loss. I know you don't have to use this function, but it just makes a mockery of what the access accounts were meant to be.
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