ian
Posts: 342
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Post by ian on Aug 25, 2020 15:54:25 GMT
Stuart has it been considered to slightly lower interest rates to allow the more money to go into the PF with the result that more of the at risk loans will be covered, which in turn would allow more to be withdrawn should lenders wish? Yes we already factored that into the recent rate reduction as that lower rate leads to far higher PF contributions for a while which look potentially necessary. If we thought today that the PF contributions would not be enough to maintain target rates net of expected losses then we would have to (under the recent regulations) lower the rates again to ensure target rates after any losses were indeed thought to be achievable. We have no plan today to lower rates again as a result of that analysis as it is not thought required at present. In reality the question on the desk today is when and how can rates rise again in the future as opposed to lowering them again and we will continue to review that situation to ensure target rates are fairly expected to be achieved. Are you going to publish a lust of loans covered by the provision fund. Additionally will you stop reinvesting investors redeemed capital in those no longer covered by the provision fund ??
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dead-money
Rocket to the Moon
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Post by dead-money on Aug 25, 2020 15:56:38 GMT
Sell £10K Early trading
Wed 12/08/20 Evening 8%, 9%, 10%
Thu 13/08/20 8am until 8pm 6.6% 9.25% 7.6% 6.8% 8.2% 8.3%
Fri 14/08/20 9am 7.3%
Noon 6.5%
5pm 6.0%
overnight 6.8%
Sat 15/08/20 8am 6.1%
6pm 6.6%
Sun 16/08/20 8am 6.0%
6pm 6.6%
Mon 17/08/20 9am 6.3%
Noon 6.8%
5pm 6.6%
Tue 18/08/20 9am 6.5%
5pm 6.0%
Wed 19/08/20 9am 6.3%
Noon 6.0%
5pm 6.0%
Buy / Sell £1K
Thu 20/08/20 9am 5.7% / 6.0%
5pm 5.8% / 6.0%
Fri 21/08/20 9am 5.8% / 5.9%
5pm 5.8% / 5.9%
Sat 22/08/20 9am 5.6% / 5.9%
5pm 5.7% / 5.9%
Sun 23/08/20 9am 5.8% / 5.9%
5pm 5.80% / 5.96%
Mon 24/08/20 9am 5.80% / 5.96%
5pm 5.60% / 5.74%
That email
Tue 25/08/20 10am 6% / 11%, 12%, 13%
1pm 10.00% / 10.90%
4pm 7.47% / 9.27%
5pm 7.10% / 7.70% (8.3% for £5K+)
6pm 7.20% / 9.79% 7pm 7.20% / 8.40%
9pm 7.27% / 8.49%
10pm 7.30% / 7.70%
Wed 26/08/20 9am
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Post by stuartassetzcapital on Aug 25, 2020 18:07:31 GMT
This seems to highlight an interesting discrepancy between platforms' interpretation of regulations. If we apply the same logic to Ratesetter, then as I understand it we would dismiss their expected provision fund inflows because "they are not guaranteed to top up the PF". This would mean that the RS PF would be severely underwater (if only temporarily) because it would only exist as a small cash balance and a huge forecast liability, and therefore Ratesetter should be making part of their products untradeable too. Yet, Ratesetter seem to be able to allow existing investors to buy into the full loan pool still and sellers to sell at par (where possible) Surely one of these should be "wrong" in the FCA's eyes if we're all looking at the same rules? AC interpretation seems more in line Contingency funds: information about how the fund is performing COBS 18.12.38R 09/12/2019 A firm which offers a contingency fund must make public on a quarterly basis the following facts about how the fund is performing: (1) the size of the fund compared to total amounts outstanding on P2P agreements relevant to the contingency fund; (2) what proportion of outstanding borrowing under P2P agreements has been paid using the contingency fund; and (3) a firm must:
(a) only include the actual amount of money held in the contingency fund at the relevant time, net of any liabilities or pay outs agreed but not yet paid; and
(b) not include any amounts due to be paid into the contingency fund that have not yet been paid into it.Indeed, we have interpreted the rules correctly we feel, there does not appear to be any doubt as to what the regulations demand from us and we have followed them. So apologies for having to publish the future risk on loans but without any future potential cash inflows factored in but that’s what everyone should be doing.
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Post by stuartassetzcapital on Aug 25, 2020 18:10:50 GMT
Yes we already factored that into the recent rate reduction as that lower rate leads to far higher PF contributions for a while which look potentially necessary. If we thought today that the PF contributions would not be enough to maintain target rates net of expected losses then we would have to (under the recent regulations) lower the rates again to ensure target rates after any losses were indeed thought to be achievable. We have no plan today to lower rates again as a result of that analysis as it is not thought required at present. In reality the question on the desk today is when and how can rates rise again in the future as opposed to lowering them again and we will continue to review that situation to ensure target rates are fairly expected to be achieved. Are you going to publish a lust of loans covered by the provision fund. Additionally will you stop reinvesting investors redeemed capital in those no longer covered by the provision fund ?? All loans in the account are publicly listed as to their capital discounts if any already and we wish to do this on any suspended loans in the AA when that arises or as soon after as possible. Just because a capital discount applies to a loan with an enhanced risk doesn’t mean we should stop funding it as the risk may have little to do with the justification to fund to completion and get the full capital back versus sending it to administration - indeed we would likely not have a basis to put it into administration in any case as a capital discount doesn’t equate to a default - defaults are entirely separate.
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blender
Member of DD Central
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Post by blender on Aug 25, 2020 19:59:11 GMT
Well, that was an interesting day. The best bid-offer spread at 20:52 is now 7.6% to 7.2% discounts, or getting back closer to where it started the day. It's good to see full participation in the discussion.
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dead-money
Rocket to the Moon
Posts: 746
Likes: 654
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Post by dead-money on Aug 26, 2020 7:06:23 GMT
Sell £10K Early trading
Wed 12/08/20 Evening 8%, 9%, 10%
Thu 13/08/20 8am until 8pm 6.6% 9.25% 7.6% 6.8% 8.2% 8.3%
Fri 14/08/20 9am 7.3% Noon 6.5% 5pm 6.0% overnight 6.8%
Sat 15/08/20 8am 6.1% 6pm 6.6%
Sun 16/08/20 8am 6.0% 6pm 6.6%
Mon 17/08/20 9am 6.3% Noon 6.8% 5pm 6.6%
Tue 18/08/20 9am 6.5% 5pm 6.0%
Wed 19/08/20 9am 6.3% Noon 6.0% 5pm 6.0%
Buy / Sell £1K
Thu 20/08/20 9am 5.7% / 6.0% 5pm 5.8% / 6.0%
Fri 21/08/20 9am 5.8% / 5.9% 5pm 5.8% / 5.9%
Sat 22/08/20 9am 5.6% / 5.9% 5pm 5.7% / 5.9%
Sun 23/08/20 9am 5.8% / 5.9% 5pm 5.80% / 5.96%
Mon 24/08/20 9am 5.80% / 5.96% 5pm 5.60% / 5.74%
That email
Tue 25/08/20 10am 6% / 11%, 12%, 13%
1pm 10.00% / 10.90% 4pm 7.47% / 9.27% 5pm 7.10% / 7.70% (8.3% for £5K+) 6pm 7.20% / 9.79% 7pm 7.20% / 8.40% 9pm 7.27% / 8.49%
10pm 7.30% / 7.70%
Wed 26/08/20 8am 8.2% / 9.9% (12% for £5K+) 10am 8.1% / 10.6% (11.6% for £5K+) Noon 8.0% / 9.6% 2pm 8.4% / 9.9% 4pm 8.3% / 10.0% (10.30% for £5K+) 6pm 8.2% / 9.9% Thu 27/08/20 8am 8.3% / 9.0%
Fri 28/08/20 3pm 8.2% / 8.9%
Sat 29/08/20 9am 8.0% / 8.3%
Sun 30/08/20 9am 8.1% / 8.5% (8.7% for £5K) 8pm 7.5%
Mon 31/08/20 10am 7.8% / 8.0% (8.3% for £5K, 8.5% for £10K) 10pm 7.6% / 8.3%
Monthly interest due
Tue 01/09/20
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Post by bradley02 on Aug 26, 2020 11:06:35 GMT
After Stuart's further information provided yesterday, I can see a 10%+ discount to buy into the AAs as a opportunity if you are in a position to invest. Possible (not probable) worse case scenario and fear of the unknown, is covered by a 10%+ discount. If AC, as implied, are looking as their next step regarding rates is to increase the AA interest rates rather than any further reduction as soon as can be achieved then the current discount rates will soon dissappear especially once monthly interest and redemption payments are available to reinvest over the next few months and the restart of the AA marketplace Q3. 2 to 3% discount by year end ??
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dead-money
Rocket to the Moon
Posts: 746
Likes: 654
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Post by dead-money on Aug 26, 2020 11:27:27 GMT
After Stuart's further information provided yesterday, I can see a 10%+ discount to buy into the AAs as a opportunity if you are in a position to invest. Possible (not probable) worse case scenario and fear of the unknown, is covered by a 10%+ discount. If AC, as implied, are looking as their next step regarding rates is to increase the AA interest rates rather than any further reduction as soon as can be achieved then the current discount rates will soon dissappear especially once monthly interest and redemption payments are available to reinvest over the next few months and the restart of the AA marketplace Q3. 2 to 3% discount by year end ?? Yep, place buys at 10%+ in the morning, then reverse with sells at 8%- in the afternoon, repeat each day. You make £109 profit per 1% spread on each £10K flipped.
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Post by bradley02 on Aug 26, 2020 12:15:59 GMT
After Stuart's further information provided yesterday, I can see a 10%+ discount to buy into the AAs as a opportunity if you are in a position to invest. Possible (not probable) worse case scenario and fear of the unknown, is covered by a 10%+ discount. If AC, as implied, are looking as their next step regarding rates is to increase the AA interest rates rather than any further reduction as soon as can be achieved then the current discount rates will soon dissappear especially once monthly interest and redemption payments are available to reinvest over the next few months and the restart of the AA marketplace Q3. 2 to 3% discount by year end ?? Yep, place buys at 10%+ in the morning, then reverse with sells at 8%- in the afternoon, repeat each day. You make £109 profit per 1% spread on each £10K flipped. Making hay while the Sun's obscured above passing clouds, I like it
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Post by bradley02 on Aug 27, 2020 15:36:42 GMT
£5k Buy discount 8.1%
£5k Sell discount 8.4%
No more 11,10,9% buy discounts
Reinvested interest payments in five days.
Maybe no more 8,7,6,5% ??
As a buyer, I personally hope not.
That said, I do hope that the prudent precautions regarding the PF as explained in the email have not been misunderstood and worried investors into selling at a discount.
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jlend
Member of DD Central
Posts: 1,840
Likes: 1,465
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Post by jlend on Aug 27, 2020 16:07:15 GMT
£5k Buy discount 8.1% £5k Sell discount 8.4% No more 11,10,9% buy discounts Reinvested interest payments in five days. Maybe no more 8,7,6,5% ?? As a buyer, I personally hope not. That said, I do hope that the prudent precautions regarding the PF as explained in the email have not been misunderstood and worried investors into selling at a discount. An additional challenge at the moment is the 0.9% lender fee on the access accounts which means there is less money going into the Access account PFs at the moment even before the impact of additional ring fencing. This is partly offset by the reduction in the target rates, but non the less the PFs have less money coming in each month due to the lender fee. It would be good to see the lender fee gradually withdrawn as CBIL lending ramps up. In the past the access account PFs have had over 2m in unallocated cash. I don't know if AC have any thoughts about where it should be in the future, perhaps 2m is too high? It is clearly close to zero at the moment and really needs building up in case there is a difficult winter. It is not inconceivable that a material number of loans will need 3 to 6 months forbearance again due to local covid issues.
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Post by stuartassetzcapital on Aug 27, 2020 16:54:29 GMT
£5k Buy discount 8.1% £5k Sell discount 8.4% No more 11,10,9% buy discounts Reinvested interest payments in five days. Maybe no more 8,7,6,5% ?? As a buyer, I personally hope not. That said, I do hope that the prudent precautions regarding the PF as explained in the email have not been misunderstood and worried investors into selling at a discount. An additional challenge at the moment is the 0.9% lender fee on the access accounts which means there is less money going into the Access account PFs at the moment even before the impact of additional ring fencing. This is partly offset by the reduction in the target rates, but non the less the PFs have less money coming in each month due to the lender fee. It would be good to see the lender fee gradually withdrawn as CBIL lending ramps up. In the past the access account PFs have had over 2m in unallocated cash. I don't know if AC have any thoughts about where it should be in the future, perhaps 2m is too high? It is clearly close to zero at the moment and really needs building up in case there is a difficult winter. It is not inconceivable that a material number of loans will need 3 to 6 months forbearance again due to local covid issues. The lender fee being introduced didn't stop the PF contributions going up to substantially more than previously, due to the drop in target rates mainly.
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jlend
Member of DD Central
Posts: 1,840
Likes: 1,465
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Post by jlend on Aug 27, 2020 17:11:07 GMT
An additional challenge at the moment is the 0.9% lender fee on the access accounts which means there is less money going into the Access account PFs at the moment even before the impact of additional ring fencing. This is partly offset by the reduction in the target rates, but non the less the PFs have less money coming in each month due to the lender fee. It would be good to see the lender fee gradually withdrawn as CBIL lending ramps up. In the past the access account PFs have had over 2m in unallocated cash. I don't know if AC have any thoughts about where it should be in the future, perhaps 2m is too high? It is clearly close to zero at the moment and really needs building up in case there is a difficult winter. It is not inconceivable that a material number of loans will need 3 to 6 months forbearance again due to local covid issues. The lender fee being introduced didn't stop the PF contributions going up to substantially more than previously, due to the drop in target rates mainly. The drop in target rate on the QAA was 4.1 to 3.75 so 0.35% reduction to lender rate I think from memory. So 0.35% extra going into the PF for the QAA. The lender fee is 0.9%. You may well be right for other reasons but it looks like the target rate change is less that the lender rate fee? Perhaps I am missing something. Happy to be corrected.
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Post by stuartassetzcapital on Aug 27, 2020 17:45:47 GMT
£5k Buy discount 8.1% £5k Sell discount 8.4% No more 11,10,9% buy discounts Reinvested interest payments in five days. Maybe no more 8,7,6,5% ?? As a buyer, I personally hope not. That said, I do hope that the prudent precautions regarding the PF as explained in the email have not been misunderstood and worried investors into selling at a discount. An additional challenge at the moment is the 0.9% lender fee on the access accounts which means there is less money going into the Access account PFs at the moment even before the impact of additional ring fencing. This is partly offset by the reduction in the target rates, but non the less the PFs have less money coming in each month due to the lender fee. It would be good to see the lender fee gradually withdrawn as CBIL lending ramps up. In the past the access account PFs have had over 2m in unallocated cash. I don't know if AC have any thoughts about where it should be in the future, perhaps 2m is too high? It is clearly close to zero at the moment and really needs building up in case there is a difficult winter. It is not inconceivable that a material number of loans will need 3 to 6 months forbearance again due to local covid issues. Let me just remind readers initially that regardless of what I explain here, the provision fund is discretionary and not guaranteed to pay out and also not guaranteed to cover all losses. It's all explained here : www.assetzcapital.co.uk/provision-fund What follows is to help with transparency and understanding of the flow and ebb of the provision fund system we have deployed to help reduce misunderstandings and improve investors' knowledge and help them better decide to disinvest, not invest at all to start with, or invest in good knowledge of the process. The provision fund is expected to fluctuate over the cycle not maintain a constant level. We run the business, and set rates in a way that seeks to see the PF hold un-ringfenced cash balances in good years (and available for future use) and ideally, but not in the slightest guaranteed, to cover some or all of the risk of losses in the bad years. If the provision fund cash balance in some bad times is outweighed by more assessed loan risk in its loan portfolio than the current PF cash balance then, under the T&Cs, that leads to some loans being suspended in the Access Accounts to prevent trading (new possible process under evaluation). That loan suspension process hasn't happened yet but likely will as this is the worst economic shock to hit the country for decades at least if not hundreds of years. Nonetheless the dynamics and mathematics of the PF operation needs to be understood, and data provided by us, and then investors can take a view. If for example more money flows in to the PF one month than is offset by new loan loss risk that month then there is spare cash added to the PF and previously unprotected loan risk in suspended loans (if any) would be reduced by that spare extra PF cash. If there were no suspended loans left then the spare cash balance in the PF would grow. And vice versa when, for example, we head into a downturn such as this year where the PF cashflows in each month are outweighed by greater loan risk growth then that uses up all the new PF cash that month, and more, and if there was no spare PF cash left at that time then it would cause loan suspensions. Remember that ringfencing of loan risk by PF cash is to cover future potential loan risk with today's PF cash holdings and no notice is taken of future PF contributions, however likely or not, as that is the FCA regulations on the matter and it is black and white. If the future PF contributions do arrive then it is potential upside to the current position if future recognised loan risk is outweighed by that future cash, and vice-versa. The question to answer is does any PF shortfall in the bad times get covered by future PF contributions ? Unfortunately we cannot answer or simply project what may or may not happen in the future, but we will be publishing data, and already do quarterly, to help investors see if the loan risk shortfall is growing or reducing over time so far and make their own decisions. If PF contributions again manage to outweigh all previously uncovered losses there will again be a cash surplus in the PFs. And if the PF contributions for some reason never catch up with actual loan losses over time then there would be a capital loss on the accounts. We cant advise on all of this unfortunately and I hope you understand, as the regulations specifically prevent us from factoring in one penny of future PF contributions but we do think we could give you more current data on what is happening without straying into that territory. It is only fair to give you a greater amount of useful data and information and we will get our heads around how to do so compliantly shortly. Over time we would like to be judged by what we deliver as investment returns and what the risk and volatility of those total returns are over time and we aim to deliver as smooth a return as possible but with no guarantees. That raw and honest investment return will reflect how well we lend your money and get it back. We have set our business up and staffed it in a way that we feel can do the best possible job for you in these low interest times, and in the end time will tell how well we did.
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Post by bradley02 on Aug 28, 2020 8:34:50 GMT
£5k Buy discount 8.1% £5k Sell discount 8.4% No more 11,10,9% buy discounts Reinvested interest payments in five days. Maybe no more 8,7,6,5% ?? As a buyer, I personally hope not. That said, I do hope that the prudent precautions regarding the PF as explained in the email have not been misunderstood and worried investors into selling at a discount. £5k buy discount dropped to 7.5% from 8% just prior to this mornings redemption payment. Probably reinvestment. A sign confidence. Next weeks interest payment reinvestment will be interesting.
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