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Post by Harland Kearney on Apr 27, 2020 19:18:32 GMT
If we going to use this thread to talk about this, maybe a thread that is not misleading might be a bit better?
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alender
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Post by alender on Apr 27, 2020 19:54:01 GMT
Well I certainly was not expecting this when I invested, I thought I was investing in a simple AA, this looks AC are going to create a CDO which will have no floor and a cap and only tradable through AC. It can fall to any amount of discount but will be capped at par as no one will buy at a premium when you can go in at par directly in the AAs. Did not see this in the T&Cs.
I can see a lot of flipping going on with this new instrument, perhaps we can get some candle graphs so traders can analyse and move in and out for quick profits or even some spread betting options and how about some crypto loans.
What "new instrument"? An existing holding of Access Account loans is sold directly from one lender to another, at a market price they both are happy with. No different to any other P2P secondary market. Flipping in P2P has existed for as long as P2P itself. This is new, because it is the first time you could buy portion of the AAs at a discount, different from buying them all in MLA because of PF and the loans in these AA are not a fixed set at fixed proportions.
What AC are planning to create is in effect an ABS instrument, this instrument will be traded through AC between a buyer and a seller and will have a variable interest rate set by AC. You will be able to buy or sell a portion of the AAs loans at an agreed discount, this will not trade above par as the buyer would just buy into the AAs direct.
Definition of an ABS
An asset-backed security (ABS) is a security whose income payments and hence value are derived from and collateralized (or "backed") by a specified pool of underlying assets.
The pool of assets is typically a group of small and illiquid assets which are unable to be sold individually. Pooling the assets into financial instruments allows them to be sold to general investors, a process called securitization, and allows the risk of investing in the underlying assets to be diversified because each security will represent a fraction of the total value of the diverse pool of underlying assets. The pools of underlying assets can include common payments from credit cards, auto loans, and mortgage loans, to esoteric cash flows from aircraft leases, royalty payments and movie revenues.
This will be more complex because the underlying loans proportions are constantly changing. The proportional payment system will allow a small investor buying a small proportion of AAs loans to get a greater proportion/all of their money out at par than someone buying a larger proportion or (currently locked in) who will probably never get out via repayment system. Lets call this £1 units (par value) so the more more units you own the less valuable each unit will be.
Flipping in P2P has existed for as long as P2P itself but not the AAs which is one of the reasons I invested in AAs, I saw a lot of posts on boards like FC where a number of people were flipping loans, as I did not have time or the knowledge to analyse particular loans I was not happy to be directly invested in loans that are being flipped.
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dead-money
Rocket to the Moon
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Post by dead-money on Apr 27, 2020 19:58:14 GMT
Yes, can we please have a proper robust solution to the <0.01p holdings and accounts ! Currently with the 'Beta' site the solution seems to be to hide them and not show them in reports or account downloads....
"4. Can you make sure an account balance can be taken down to zero (rather than being left with "<0.01p" in an
account)
5. Can holding from GBBA/Prop secured not be disposed of in similar fashion or even just offered as a donatation for
someone else to accept if getting rid of small balances."
Access account secondary markets definitely seem like an arbitrage opportunity. This alongside buying up >10% discounted MLA loan parts is keeping this lockdown interesting !
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alender
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Post by alender on Apr 27, 2020 20:50:28 GMT
Except that you very rapidly run out of small lenders willing to take the risk, no if you read what I said the 80 will return once cashed out but this time they have £1250 + interest.
But I did not buy in the MLA, if I had I would have received extra interest and any loan repayments would have been passed back to me not re-lent.
If you do not subordinate the QAA chunks sold you can kiss good by to the AAs as a product, who would now directly invest in AAs.
Return after how long? And if you NEED the money, presumably you'd quite like them to return - who else is going to buy your QAA debt from you? Liquidity has a cost - if it's too high, then don't use it. I guess they could return after they have drained all the money out via the withdrawal system, if this was available when the pool system was opened a buy at a 20% discount for £400 would have seen a return in cash £500 + interest by now not bad for a few weeks.
I invested in AAs, I did not expect full liquidity in a crises but I expected some liquidity from the repayment of the performing loans and my accounts not to be undermined by the pool system and creating SM where small investors who buy at a discount will get out at par in front of me.
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Post by honda2ner on Apr 27, 2020 21:48:02 GMT
Return after how long? And if you NEED the money, presumably you'd quite like them to return - who else is going to buy your QAA debt from you? Liquidity has a cost - if it's too high, then don't use it. I guess they could return after they have drained all the money out via the withdrawal system, if this was available when the pool system was opened a buy at a 20% discount for £400 would have seen a return in cash £500 + interest by now not bad for a few weeks.
I invested in AAs, I did not expect full liquidity in a crises but I expected some liquidity from the repayment of the performing loans and my accounts not to be undermined by the pool system and creating SM where small investors who buy at a discount will get out at par in front of me.
Presumably AC would switch back to a FIFO queue quicker if discounts attracted more money onto the platform so yes, you're position in the current pooled queue would be undermined but the whole queue shrinks. It also weakens ACs argument for the pooling, if desperate lenders can get their money out by discounting there is less need to protect the smaller investors as individual lenders can price the level of liquidity themselves. Amusing to see people shouting for FIFO but resisting a SM, IMO it's the only way to get to FIFO. As AC has been talking about a SM for the AA since God was a lad I don't see how anyone can be surprised by this announcement, even less that it's the crime of the century.
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alender
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Post by alender on Apr 28, 2020 5:39:22 GMT
I guess they could return after they have drained all the money out via the withdrawal system, if this was available when the pool system was opened a buy at a 20% discount for £400 would have seen a return in cash £500 + interest by now not bad for a few weeks.
I invested in AAs, I did not expect full liquidity in a crises but I expected some liquidity from the repayment of the performing loans and my accounts not to be undermined by the pool system and creating SM where small investors who buy at a discount will get out at par in front of me.
Presumably AC would switch back to a FIFO queue quicker if discounts attracted more money onto the platform so yes, you're position in the current pooled queue would be undermined but the whole queue shrinks. It also weakens ACs argument for the pooling, if desperate lenders can get their money out by discounting there is less need to protect the smaller investors as individual lenders can price the level of liquidity themselves. Amusing to see people shouting for FIFO but resisting a SM, IMO it's the only way to get to FIFO. As AC has been talking about a SM for the AA since God was a lad I don't see how anyone can be surprised by this announcement, even less that it's the crime of the century. Unfortunately what AC is preposing will not attract more money to the platform, the AUM will not be changed, it will be a bit like buying or selling shares, if a share is traded the assets in the company remain the same. It will however encourage some people to buy small amounts and then request withdrawals as explained adding more entrants and therefore further pressure to the withdraw pool.
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Post by dan1 on Apr 28, 2020 8:30:59 GMT
Can you tell us where this money will go, is it to be kept in the AAs so it benefits lenders staying in these accounts?
Also will this slow or in effect stop the process of AA lenders getting their money out at par?
Can the AA lenders have a vote on the preposed changes?
It is a trade between a buyer and seller, with the seller offing the buyer a discount for taking over their holding. There's no money entering or leaving the access accounts. Savers losing appetite as they turn to fright but all to traders delight 
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IFISAcava
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Post by IFISAcava on Apr 28, 2020 9:05:34 GMT
Return after how long? And if you NEED the money, presumably you'd quite like them to return - who else is going to buy your QAA debt from you? Liquidity has a cost - if it's too high, then don't use it. I guess they could return after they have drained all the money out via the withdrawal system, if this was available when the pool system was opened a buy at a 20% discount for £400 would have seen a return in cash £500 + interest by now not bad for a few weeks.
I invested in AAs, I did not expect full liquidity in a crises but I expected some liquidity from the repayment of the performing loans and my accounts not to be undermined by the pool system and creating SM where small investors who buy at a discount will get out at par in front of me.
I don't see how they will be in front of you - it's pooled. If a queue system is ever reinstated either they keep the place of those chunks or go to the back of the queue. And it is very likely they already have AA investments of one sort or another so they won't change anything in terms of number of people in the pooling. Even if they didn't, then it is the same as anyone else newly buying into the AA (or exiting the 90-day). You could of course argue for closing the AA accounts to new investments, but that would cut off a source of the very liquidity at par that you crave.
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IFISAcava
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Post by IFISAcava on Apr 28, 2020 9:09:04 GMT
Presumably AC would switch back to a FIFO queue quicker if discounts attracted more money onto the platform so yes, you're position in the current pooled queue would be undermined but the whole queue shrinks. It also weakens ACs argument for the pooling, if desperate lenders can get their money out by discounting there is less need to protect the smaller investors as individual lenders can price the level of liquidity themselves. Amusing to see people shouting for FIFO but resisting a SM, IMO it's the only way to get to FIFO. As AC has been talking about a SM for the AA since God was a lad I don't see how anyone can be surprised by this announcement, even less that it's the crime of the century. Unfortunately what AC is preposing will not attract more money to the platform, the AUM will not be changed, it will be a bit like buying or selling shares, if a share is traded the assets in the company remain the same. It will however encourage some people to buy small amounts and then request withdrawals as explained adding more entrants and therefore further pressure to the withdraw pool. I've reworded this for you: It will however encourage some people to provide the liquidity I desire and then request withdrawals
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Post by honda2ner on Apr 28, 2020 9:20:12 GMT
Presumably AC would switch back to a FIFO queue quicker if discounts attracted more money onto the platform so yes, you're position in the current pooled queue would be undermined but the whole queue shrinks. It also weakens ACs argument for the pooling, if desperate lenders can get their money out by discounting there is less need to protect the smaller investors as individual lenders can price the level of liquidity themselves. Amusing to see people shouting for FIFO but resisting a SM, IMO it's the only way to get to FIFO. As AC has been talking about a SM for the AA since God was a lad I don't see how anyone can be surprised by this announcement, even less that it's the crime of the century. Unfortunately what AC is preposing will not attract more money to the platform, the AUM will not be changed, it will be a bit like buying or selling shares, if a share is traded the assets in the company remain the same. It will however encourage some people to buy small amounts and then request withdrawals as explained adding more entrants and therefore further pressure to the withdraw pool. A sizeable discount would attract my money (and I suspect quite a few others as we aren't all suicidal due to the sensible temporary changes AC have made to look after lenders collectively instead of a wealthy few). Yes, I might flip it back up for sale as I do with most of my MLA holdings but the money isn't going off the platform when it sells, it's going back into either the MLA or more AA discounted loans. This should supercharge the queue and get some real movement going, hopefully. With enough movement AC can go back to FIFO queuing. Anything is better than the loan repayments exit which is all we have at the moment for the AAs.
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alender
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Post by alender on Apr 28, 2020 9:24:22 GMT
Unfortunately what AC is preposing will not attract more money to the platform, the AUM will not be changed, it will be a bit like buying or selling shares, if a share is traded the assets in the company remain the same. It will however encourage some people to buy small amounts and then request withdrawals as explained adding more entrants and therefore further pressure to the withdraw pool. A sizeable discount would attract my money (and I suspect quite a few others as we aren't all suicidal due to the sensible temporary changes AC have made to look after lenders collectively instead of a wealthy few). Yes, I might flip it back up for sale as I do with most of my MLA holdings but the money isn't going off the platform when it sells, it's going back into either the MLA or more AA discounted loans. This should supercharge the queue and get some real movement going, hopefully. With enough movement AC can go back to FIFO queuing. Anything is better than the loan repayments exit which is all we have at the moment for the AAs. My point is this is not new money, in your case you as you say you might flip for a quick profit. However some will just take the profit and run.
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alender
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Post by alender on Apr 28, 2020 9:30:58 GMT
I guess they could return after they have drained all the money out via the withdrawal system, if this was available when the pool system was opened a buy at a 20% discount for £400 would have seen a return in cash £500 + interest by now not bad for a few weeks.
I invested in AAs, I did not expect full liquidity in a crises but I expected some liquidity from the repayment of the performing loans and my accounts not to be undermined by the pool system and creating SM where small investors who buy at a discount will get out at par in front of me.
I don't see how they will be in front of you - it's pooled. If a queue system is ever reinstated either they keep the place of those chunks or go to the back of the queue. And it is very likely they already have AA investments of one sort or another so they won't change anything in terms of number of people in the pooling. Even if they didn't, then it is the same as anyone else newly buying into the AA (or exiting the 90-day). You could of course argue for closing the AA accounts to new investments, but that would cut off a source of the very liquidity at par that you crave. Quite simple as I stated in my example, if a investor sells £100,000 of QAA at a 20% discount to 80 small investors they have 80 lots of QAA of £1250 each. They all ask to withdraw this money(why not £1000 turns into £1250), the number in the withdraw pool goes up by 80. Let say the withdraw pool contains n investors before the the 80 get involved, each payment lets call it p to the pooled system will see each investor getting p/n, now with 80 new investors they get p/(n+80), obviously less. If and when the 80 get out they will have a nice profit, they tell their friends and family, the game starts again. Larger investors now see even less of their money back.
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cb25
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Post by cb25 on Apr 28, 2020 9:37:15 GMT
I don't see how they will be in front of you - it's pooled. If a queue system is ever reinstated either they keep the place of those chunks or go to the back of the queue. And it is very likely they already have AA investments of one sort or another so they won't change anything in terms of number of people in the pooling. Even if they didn't, then it is the same as anyone else newly buying into the AA (or exiting the 90-day). You could of course argue for closing the AA accounts to new investments, but that would cut off a source of the very liquidity at par that you crave. Quite simple as I stated in my example, if a investor sells £100,000 of QAA at a 20% discount to 80 small investors they have 80 lots of QAA of £1250 each. They all ask to withdraw this money(why not £1000 turns into £1250), the number in the withdraw pool goes up by 80. Let say the withdraw pool contains n investors before the the 80 get involved, each payment lets call it p to the pooled system will see each investor getting p/n, now with 80 new investors they get p/(n+80), obviously less. If and when the 80 get out they will have a nice profit, they tell their friends and family, the game starts again. Larger investors now see even less of their money back. To your previous point "My point is this is not new money" first - I suspect that would depend on the level of discount offers. If I saw really attractive discounts, I'd be tempted to add money to AC to buy some.
Wrt the number of QAA lenders jumping by 80 in your example - are you assuming those 80 don't already have QAA accounts, or they do but the secondary market will form yet another type of access account?
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IFISAcava
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Post by IFISAcava on Apr 28, 2020 9:41:29 GMT
I don't see how they will be in front of you - it's pooled. If a queue system is ever reinstated either they keep the place of those chunks or go to the back of the queue. And it is very likely they already have AA investments of one sort or another so they won't change anything in terms of number of people in the pooling. Even if they didn't, then it is the same as anyone else newly buying into the AA (or exiting the 90-day). You could of course argue for closing the AA accounts to new investments, but that would cut off a source of the very liquidity at par that you crave. Quite simple as I stated in my example, if a investor sells £100,000 of QAA at a 20% discount to 80 small investors they have 80 lots of QAA of £1250 each. They all ask to withdraw this money(why not £1000 turns into £1250), the number in the withdraw pool goes up by 80. Let say the withdraw pool contains n investors before the the 80 get involved, each payment lets call it p to the pooled system will see each investor getting p/n, now with 80 new investors they get p/(n+80), obviously less. If and when the 80 get out they will have a nice profit, they tell their friends and family, the game starts again. Larger investors now see even less of their money back. 1. Only if the 80 new investors don't already have AA holdings 2. If you sold out to them then you already got your money back at the front of the queue a) at a discount that reflected the value of your loans and b) at a price you felt worth paying 3. The "queue" isn't really a queue - you see it that way because as a larger investor your sums will take longer to get out whatever happens. 4. The difference between n and n+x (where x is the number of people buying into the QAA who don't already have a QAA amount waiting withdrawal) is likely to be minimal. 5. In any case, people can already do what you say, just not at a discount - people are still buying into the QAA and adding to the pool for withdrawals - do you want to stop them too?
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Post by valerieb on Apr 28, 2020 9:59:49 GMT
Not all money queued for withdrawal from the QAA is heading for the exit. I would welcome the opportunity to move cash from the QAA to the MLA a little speedier than around £2 per day!
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