alender
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Post by alender on Apr 30, 2020 13:05:18 GMT
Lots of interesting comments about the difficulty of pricing a traded AA, the games we might play, and the steps that might be taken to reduce the impact of that. Can I just refer back to some comments made a while ago by one or more of the Assetz guys - that they were looking seriously at a one-off non-reversible option to crystallise a share of the AAs into its constituent parts? You'd find yourself holding 550 or whatever loan parts, in various states of health, plus a little cash. In that scenario we'd just be trading loans, presumably in the open MLA market. What does the panel think about that option? Is it still on the table? I think the 3 options are: 1 Trading of access account holdings, effectively like an index - one transaction between buyer and seller at some price 2 Split up into consituent parts enabling sale of the non-suspended loans via MLA - likely to be very time consuming, but nevertheless provides an exit Option 1 above was described as being released "shortly" on April 7th. Option 2 was described as "imminent" on April 27th Option 3 is to sit and rot in the withdrawal queue (or whatever you want to call it), which seems to be the least favourable option for many Unfortunately option 2 is very unlikely to exist because AC need the repayments from the AAs to fund future tranches of loans they have made.
Option 1 would reduce payments to holders who wish to remain or at least do not want to sell at discount, as gaming will cause more people enter the repayment pool (I hope this will increase in Jun due to less tranche payments) unless restrictions are placed on the traded AAs but these would lead to larger discounts. Without restrictions it will probably lead to more complaints to the Financial Ombudsman when AC reach 25 for the year they will be charged £550 per complaint no matter what the outcome.
Option 3, not good either.
I just hope AC are looking at some better options but apart from changing the pool to pro rata I can not think of any.
Just hope we can be partially saved by tranche commitments not being taken up as cheaper financing becomes available back up by government so effectively ignoring risks.
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IFISAcava
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Post by IFISAcava on Apr 30, 2020 13:22:11 GMT
With all these complaints about how unfair it will be when people are able to sell AA loan parts, shall we just call it off so no one has any access to liquidity? I don't see any complaints about selling of AA loan parts, per se. I do see unfavourable comments about 'gaming the system' and the potential profiteering from the reselling of loan parts bought at a discount via automated processes. Would you be looking to participate in the latter activity? Not sure how buying and selling in a market is "gaming the system". I'd consider buying at the right price and selling at the right price, whilst taking risk in the interim. Which is what I do on the MLA. if you don't want people buying and selling at variable discounts (or "profiteering"), fine - that's the current system for the AAs. Leave it as it is.
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agent69
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Post by agent69 on Apr 30, 2020 13:39:58 GMT
I don't see any complaints about selling of AA loan parts, per se. I do see unfavourable comments about 'gaming the system' and the potential profiteering from the reselling of loan parts bought at a discount via automated processes. Would you be looking to participate in the latter activity? Not sure how buying and selling in a market is " gaming the system". I'd consider buying at the right price and selling at the right price, whilst taking risk in the interim. Which is what I do on the MLA. if you don't want people buying and selling at variable discounts (or "profiteering"), fine - that's the current system for the AAs. Leave it as it is. I've often wondered what the difference is between 'gaming the system' and having a prudent investment strategy
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Post by simons on Apr 30, 2020 13:45:42 GMT
I think the 3 options are: 1 Trading of access account holdings, effectively like an index - one transaction between buyer and seller at some price 2 Split up into consituent parts enabling sale of the non-suspended loans via MLA - likely to be very time consuming, but nevertheless provides an exit Option 1 above was described as being released "shortly" on April 7th. Option 2 was described as "imminent" on April 27thOption 3 is to sit and rot in the withdrawal queue (or whatever you want to call it), which seems to be the least favourable option for many Is that the case, simons ? If you are referring to the following from the 27th, " We will be announcing, imminently, new functions to allow trading in the Access Accounts to permit people to potentially release their cash more quickly but without impacting on the funding of in-flight property development loans. This new functionality will not suit everyone, but it will provide another option to those who may wish to release some or all of their capital urgently." I think it could equally apply to Option 1 as it might to Option 2, where Option 1 announced on the 7th was: " As an alternative investor choice, we are exploring the possibility of an Access Accounts trading feature which would allow a choice to sell some or all of your Quick Access Account investment at a discount, subject to other investor demand at that price. This would allow you to list some or all of your Quick Access Account holdings (not individual loans) for sale to another investor." Yes iRobot, sorry I think you are right there it could be either
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jlend
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Post by jlend on Apr 30, 2020 13:48:50 GMT
IMHO
MLA
When I buy something on the MLA I know exactly what I am buying. I can read the information AC supply and do some research about the borrower and security. I can then make an informed choice about whether to invest and at what discount.
Access Accounts
With the access accounts as I am no longer invested. I would have no idea what loans I would be buying and in what proportions. I would be able to do no research and the PF stats from 31st Jan would be no use. I would be unable to make an informed decision about whether to invest in the current circumstances or what discount would be sensible. I would have no idea about the length of the queue. Clearly this is always an issue, but it is seriously worse in the current circumstances we find ourselves in.
Am not sure there is anything that can be done about this. Any ideas?
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iRobot
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Post by iRobot on Apr 30, 2020 13:57:32 GMT
I don't see any complaints about selling of AA loan parts, per se. I do see unfavourable comments about 'gaming the system' and the potential profiteering from the reselling of loan parts bought at a discount via automated processes. Would you be looking to participate in the latter activity? Not sure how buying and selling in a market is "gaming the system". I'd consider buying at the right price and selling at the right price, whilst taking risk in the interim. Which is what I do on the MLA. if you don't want people buying and selling at variable discounts (or "profiteering"), fine - that's the current system for the AAs. Leave it as it is. Via a 'bot' / automated process? I'm not against the introduction of a market for the AA accounts. I am against the introduction of a market which facilitates and rewards the use of automated tools by 'traders' to the disadvantage of vanilla lenders looking to exit the market. It's fine to take the risk in the interim, so long as that 'interim' isn't measured in seconds. I just don't feel there's a place for automated-trading in P2P and am hopeful that AC are similarly minded.
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alender
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Post by alender on Apr 30, 2020 14:09:54 GMT
I don't see any complaints about selling of AA loan parts, per se. I do see unfavourable comments about 'gaming the system' and the potential profiteering from the reselling of loan parts bought at a discount via automated processes. Would you be looking to participate in the latter activity? Not sure how buying and selling in a market is "gaming the system". I'd consider buying at the right price and selling at the right price, whilst taking risk in the interim. Which is what I do on the MLA. if you don't want people buying and selling at variable discounts (or "profiteering"), fine - that's the current system for the AAs. Leave it as it is. Gaming the system will be buying in the market and then asking for all interest and repayment to be withdrawn.
OK, if you already have an account waiting for withdrawals so no advantage for you for this account. But you can create accounts for other family members and companies, put in a small amount of cash as I said before £200 should be enough to start with (more if withdrawals increase) for each account buy AA holding at a discount, request withdrawals when £200 withdrawn, wash rinse and start again. Now more people in the pool so payments decrease even more.
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IFISAcava
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Post by IFISAcava on Apr 30, 2020 15:38:34 GMT
Not sure how buying and selling in a market is "gaming the system". I'd consider buying at the right price and selling at the right price, whilst taking risk in the interim. Which is what I do on the MLA. if you don't want people buying and selling at variable discounts (or "profiteering"), fine - that's the current system for the AAs. Leave it as it is. Via a 'bot' / automated process? I'm not against the introduction of a market for the AA accounts. I am against the introduction of a market which facilitates and rewards the use of automated tools by 'traders' to the disadvantage of vanilla lenders looking to exit the market. It's fine to take the risk in the interim, so long as that 'interim' isn't measured in seconds. I just don't feel there's a place for automated-trading in P2P and am hopeful that AC are similarly minded. Yes I agree bots can be an issue in certain circumstances But given that there is not really any instant trading on AC hard to see how that would work. I suppose some fancy arbitrage could be thought up - but truly I doubt it would be worth in on the AA accounts.
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alender
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Post by alender on Apr 30, 2020 16:34:22 GMT
Via a 'bot' / automated process? I'm not against the introduction of a market for the AA accounts. I am against the introduction of a market which facilitates and rewards the use of automated tools by 'traders' to the disadvantage of vanilla lenders looking to exit the market. It's fine to take the risk in the interim, so long as that 'interim' isn't measured in seconds. I just don't feel there's a place for automated-trading in P2P and am hopeful that AC are similarly minded. Yes I agree bots can be an issue in certain circumstances But given that there is not really any instant trading on AC hard to see how that would work. I suppose some fancy arbitrage could be thought up - but truly I doubt it would be worth in on the AA accounts. I had not though about bots but this could be an issue.
From some recent information posted on the board the AAs have £215,000,000, this would put it in a position of about 460 in the FTSE 1000 so a decent size for trading. Traders will look for all opportunities to trade as can be seen by crypto currencies, if no restrictions, no trading costs, no stamp duty etc this could be an opportunity. I know a number of amateur (one who just uses it to pay for her weekly shopping) and some professional traders, I go along to their meetings and I am interested in their thought processes and how that can help me with investments. They talk about many things but the one biggest item is their system, they use technology to follow any number of things that can be traded look for patterns and then create systems, dry test it, fine tune it and if successful commit money, the tech savvy ones are doing this automatically with their own programs. I used to ask about the underlining investments, the answer is don't know, don't care, we in and out. Pattens could be at EOM around pay day or interest payments when money gets invested. They will also create alerts if there are fast changes then look for an underlining cause and if it looks favourable jump in and out with usually a profit. I would really hate to see this happen to AAs.
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Post by simons on May 1, 2020 11:10:14 GMT
Thanks for everyones input on this. I am going to go with 50%, realising it is a function of investment size. I struggle to see any scenario in which the loss is less than 30% and if the current situation remains in place then the losses will be much greater than 50%. Hopefully it will end up being the lower figure but at the moment I am not very optimistic.
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Post by Ace on May 1, 2020 11:19:27 GMT
Thanks for everyones input on this. I am going to go with 50%, realising it is a function of investment size. I struggle to see any scenario in which the loss is less than 30% and if the current situation remains in place then the losses will be much greater than 50%. Hopefully it will end up being the lower figure but at the moment I am not very optimistic. Seems a tad difficult to justify given that your poll gives an average of roughly 12%.
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r00lish67
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Post by r00lish67 on May 1, 2020 11:23:30 GMT
Thanks for everyones input on this. I am going to go with 50%, realising it is a function of investment size. I struggle to see any scenario in which the loss is less than 30% and if the current situation remains in place then the losses will be much greater than 50%. Hopefully it will end up being the lower figure but at the moment I am not very optimistic. With the large disclaimer that I know very little about this, this just seems very odd to me. Can one/should one really pencil in a loss of 50% (or indeed anything) for an investment product which has not declared any forthcoming loss/impairment? (beyond withdrawals being slowed). Could that not be perceived as tax avoidance? I'm just gonna repeat once more, I am speaking from a position of ignorance here and not accusing anyone of anything. It just sounds like declaring whatever losses you fancy based on very little info seems rather too convenient. What happens if you're wrong and they return 100% of your capital next year - would you then just pay tax on that 'reappeared' loss, or might you be considered as having shuffled around income to your tax benefit inappropriately?
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Post by Harland Kearney on May 1, 2020 11:27:44 GMT
Thanks for everyones input on this. I am going to go with 50%, realising it is a function of investment size. I struggle to see any scenario in which the loss is less than 30% and if the current situation remains in place then the losses will be much greater than 50%. Hopefully it will end up being the lower figure but at the moment I am not very optimistic. With the large disclaimer that I know very little about this, this just seems very odd to me. Can one/should one really pencil in a loss of 50% (or indeed anything) for an investment product which has not declared any forthcoming loss/impairment? (beyond withdrawals being slowed). Could that not be perceived as tax avoidance? I'm just gonna repeat once more, I am speaking from a position of ignorance here and not accusing anyone of anything. It just sounds like declaring whatever losses you fancy based on very little info seems rather too convenient. What happens if you're wrong and they return 100% of your capital next year - would you then just pay tax on that 'reappeared' loss, or might you be considered as having shuffled around income to your tax benefit inappropriately? From what my accountant said, losses on P2P and only be offset against other P2P income firstly. But losses can be declared assuming a default has occured on the investment and that said default can be backed up. Any recoveries are then taxed forward. Losses can be rolled over for the following years. Personally, I think you have a hard time telling HMRC you have a 50% loss in a such a large investment, when all that has happened so far is queued withdrawals. You are still generating interest. Why should we pay tax on our interest and you don't have to? Just a question, but its true. Not advice, you should seek independant advice. If u have a good accountant you should be able to sort something if tax liability has become a issue because of the locked up funds. If you want to sell your loans for a 50% loss if AC bring up with SM for AA's anyimte soon feel free. I just think thats a tad very very high, if judging the MLA loans goes by anything. Maybe if you are first in, we'll see a spike of very high discounts because panic holders rushing out but I imagine you will suffer serious whiplash.
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Post by simons on May 1, 2020 11:34:56 GMT
Thanks for everyones input on this. I am going to go with 50%, realising it is a function of investment size. I struggle to see any scenario in which the loss is less than 30% and if the current situation remains in place then the losses will be much greater than 50%. Hopefully it will end up being the lower figure but at the moment I am not very optimistic. Seems a tad difficult to justify given that your poll gives an average of roughly 12%. The poll gives an average of all investors, thats the problem. You are much more likely to experience a zero or low loss if you have a lower amount invested. With £200k I am going to be in the upper end of loss expectations.
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iRobot
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Post by iRobot on May 1, 2020 11:35:59 GMT
Thanks for everyones input on this. I am going to go with 50%, realising it is a function of investment size. I struggle to see any scenario in which the loss is less than 30% and if the current situation remains in place then the losses will be much greater than 50%. Hopefully it will end up being the lower figure but at the moment I am not very optimistic. With the large disclaimer that I know very little about this, this just seems very odd to me. Can one/should one really pencil in a loss of 50% (or indeed anything) for an investment product which has not declared any forthcoming loss/impairment? (beyond withdrawals being slowed). Could that not be perceived as tax avoidance? I'm just gonna repeat once more, I am speaking from a position of ignorance here and not accusing anyone of anything. It just sounds like declaring whatever losses you fancy based on very little info seems rather too convenient. What happens if you're wrong and they return 100% of your capital next year - would you then just pay tax on that 'reappeared' loss, or might you be considered as having shuffled around income to your tax benefit inappropriately? Agreed. I thought it a strange position for an accountant to take, but was unaware of the OP's wider circumstances, so figured it might make sense in light of those. FWIW, when it comes to COL and Lendy, following discussions with me, my accountants are making a provision based on accrued interest I should be receiving and will only revise once losses have actually crystallised. (But as I've stated in other threads, I'm super-risk adverse when it comes to filing returns and I'd rather 'overpay' today and balance the books tomorrow when the facts are known, than increase the risk an HMRC audit further down the line.)
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