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Post by chris on Sept 8, 2015 6:07:44 GMT
There's no such thing as a free lunch. If the QAA gobbles up all the liquidity there where does that leave most MLIA users? Wil we stuck with loads of loans that we can't access to pay the rent or other day to day tasks? All my money is in AC - if I need any I've always been able to get what I need in a day or so. I don't like the idea of being forced out of the MLIA into the QAA just so that I know I can get hold of my own money. The opposite is our intention. The QAA is intended to provide liquidity and supply to those other accounts.
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Post by stuartassetzcapital on Sept 8, 2015 6:42:01 GMT
There's no such thing as a free lunch. If the QAA gobbles up all the liquidity there where does that leave most MLIA users? Wil we stuck with loads of loans that we can't access to pay the rent or other day to day tasks? All my money is in AC - if I need any I've always been able to get what I need in a day or so. I don't like the idea of being forced out of the MLIA into the QAA just so that I know I can get hold of my own money. Hi @tonyri think you should be pleasantly surprised. The QAA design uses cash as its primary liquidity so shouldn't affect other investment account liquidity at all/ much in all normal market circumstances. Nonetheless for people needing high certainty of cash being available its designed to be that most liquid account we have.
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pikestaff
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Post by pikestaff on Sept 8, 2015 6:57:35 GMT
Compliance isn't just important, complying with these regulations keeps me and my fellow directors out of jail. If we wilfully breach AML regulations that is the ultimate penalty, so I think your stance is very unfair.
No one is suggesting breaching AML regs but if a borrower owes 19K in interest, pays 19k to AC I would expect that you could argue keeping & distributing it to lenders was a reasonable action & not in breach of the law, even if it required further paperwork to "prove the source" later. Simply sending it back, exposing lenders to further non payment risk & then hiding behind AML/KYC is not a fair way to treat lenders & deleting/hiding their concerns from the Q&A is very poor form IMO.
That's not how the law works. If they passed on money from a source which turned out to be "bad" they would be guilty of money laundering. End of. I'm in this loan and I'm happy that they sent it back.
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Post by geoffrey on Sept 8, 2015 7:50:38 GMT
I'm sure this will be a useful facility, and one I may well use. While I like the fact that Assetz continues to innovate its model in a dynamic manner, I would sound a slight note of caution. A lot of very bright people -- mathematical whizz kids no less -- deluded themselves in the early 2000s, before the credit crunch, that solving liquidity issues and magicking away investment risk were merely coding problems. With the right packaging of products and clever borrowing against committed funds, the financial law of gravity itself could be overcome. Chris, this is absolutely no criticism of you -- you do a brilliant job. It is a slight note of caution towards the Assetz strategy overall. AC seems to be going down the road of finding clever ways to generate liquidity in a market that is rather illiquid for one fundamental reason: a sluggish loan pipe and a number of loans suspended for trading or under monitoring events. No amount of clever systems innovation will resolve these problems or make them disappear behind a wall of other people's cash. I really don't want to sound negative, but I do want to sound cautious. A really good business is built on its fundamentals, and "boring" systems that really haven't changed that much, such as RateSetter, can often do well because they are stable, predictable and comprehensible... I feel conflicted because, as I say, I like the fact that AC is creative and innovative. But after this last innovation, I would urge a return to the fundamentals of the business -- get those right and I think you have a winner.
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Mike
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Post by Mike on Sept 8, 2015 8:03:07 GMT
If this works as I am expecting, then I will be a supporter. Not for the added whole-market liquidity, but just so idle cash can be put to some use. I think the rate is about right; although I am not clear on the `capped, target interest rate' (capped at what? The 'target' is actually a floor?).
It sounds like a fun tool to code, too!
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Post by Ton ⓉⓞⓃ on Sept 8, 2015 9:38:51 GMT
In AC modelling of the QAA how often are you expecting that we go out side of "normal market conditions"? Once a month, once every ten years...
No hurry for an answer.
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Post by chris on Sept 8, 2015 10:11:52 GMT
I'm sure this will be a useful facility, and one I may well use. While I like the fact that Assetz continues to innovate its model in a dynamic manner, I would sound a slight note of caution. A lot of very bright people -- mathematical whizz kids no less -- deluded themselves in the early 2000s, before the credit crunch, that solving liquidity issues and magicking away investment risk were merely coding problems. With the right packaging of products and clever borrowing against committed funds, the financial law of gravity itself could be overcome. Chris, this is absolutely no criticism of you -- you do a brilliant job. It is a slight note of caution towards the Assetz strategy overall. AC seems to be going down the road of finding clever ways to generate liquidity in a market that is rather illiquid for one fundamental reason: a sluggish loan pipe and a number of loans suspended for trading or under monitoring events. No amount of clever systems innovation will resolve these problems or make them disappear behind a wall of other people's cash. I really don't want to sound negative, but I do want to sound cautious. A really good business is built on its fundamentals, and "boring" systems that really haven't changed that much, such as RateSetter, can often do well because they are stable, predictable and comprehensible... I feel conflicted because, as I say, I like the fact that AC is creative and innovative. But after this last innovation, I would urge a return to the fundamentals of the business -- get those right and I think you have a winner. The technology is absolutely not a substitute for deal flow, although we're aiming to ease some of the constrictions on deal flow through the use of the investment accounts. This is one facet of a big strategy and happens to be the publicly facing part of what we're doing. As everything plays out this should give us a unique offering in the market for both lenders and borrowers. I'm also hoping that we can return to the website being boring for the rest of this year after this release. There'll probably be a couple more investment accounts but the rest of this year will be for consolidation, bedding all these changes in, reacting to lender feedback, etc. I do like being at the forefront of the industry and being part of the team that comes up with all these ideas, but equally I need a bit of a breather now and there are other areas of our platform that need my attention!
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jonah
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Post by jonah on Sept 8, 2015 10:15:00 GMT
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Post by chris on Sept 8, 2015 10:15:06 GMT
In AC modelling of the QAA how often are you expecting that we go out side of "normal market conditions"? Once a month, once every ten years... No hurry for an answer. We couldn't really give you an accurate answer until we've seen the real world usage. Our expectation is a cautious "very very rarely" but people may end up using the system in ways we're not expecting and there may be more clustering of withdrawals than we are predicting. Based on real usage we may need to make some tweaks and optimisations.
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Post by stuartassetzcapital on Sept 8, 2015 10:26:38 GMT
In AC modelling of the QAA how often are you expecting that we go out side of "normal market conditions"? Once a month, once every ten years... No hurry for an answer. We are modelling for more of the latter ideally.
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bg
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Post by bg on Sept 8, 2015 10:49:20 GMT
What sort of diversification is this account going to have?
My concern is that it will basically just mop up the unpopular loans on the platform which is all well and good until there is some sort of problem.
My understanding is that you get an amount, say £1m invested into the account (and i'm sure you'll get the £1m maximum), a portion of this is retained in cash (i estimate 30%, but i'm sure you will vary this depending on various factors) and the balance (£700k say) is used to buy whatever units are available on the platform (average rate c10%, so less the cash not invested it gives a return of 7%. 3.75% is paid to investors, some is paid to a PF and AC make some profit). As things stand, most of this 700k will flow into the unpopular trade finance loans. What happens if next week these loans go under? I would say on that basis it kills the platform. Credibility would be shot How would the loss be apportioned? Which investors hold the loan element and the cash element?
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Post by mrclondon on Sept 8, 2015 11:02:45 GMT
Slightly expanding the question by bg, it would be useful if the investment criteria for QAA was known .... just as the GBBA criteria was disclosed as something along the lines of "non-green loans with max 75% LTV in property security"
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Post by geoffrey on Sept 8, 2015 11:11:37 GMT
[snip] My concern is that it will basically just mop up the unpopular loans on the platform which is all well and good until there is some sort of problem. [snip] How would the loss be apportioned? Which investors hold the loan element and the cash element? There's the rub. It's the dilemma of any bank: what happens when everyone wants to convert the investment into cash (and withdraw it) all at the same time? Obviously the first people out hold the cash, and the people left behind end up holding the non-performing loans. If it's 30% cash, then it's better than a bank (what are their regulated capital requirements? ~10%?). But it does make AC begin to look a little more like a bank and a little less like a P2B. A bank's "promise" that you can withdraw cash from your instant-access account(s) whenever you wish is good only for the first 10% of customers who want out -- or rather, it relies on the fact that 90% of people will keep their money in the bank most of the time.
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jonah
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Post by jonah on Sept 8, 2015 11:18:58 GMT
For more details on that, see Northern Rock c2008.
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Post by chris on Sept 8, 2015 11:41:36 GMT
What sort of diversification is this account going to have? My concern is that it will basically just mop up the unpopular loans on the platform which is all well and good until there is some sort of problem. My understanding is that you get an amount, say £1m invested into the account (and i'm sure you'll get the £1m maximum), a portion of this is retained in cash (i estimate 30%, but i'm sure you will vary this depending on various factors) and the balance (£700k say) is used to buy whatever units are available on the platform (average rate c10%, so less the cash not invested it gives a return of 7%. 3.75% is paid to investors, some is paid to a PF and AC make some profit). As things stand, most of this 700k will flow into the unpopular trade finance loans. What happens if next week these loans go under? I would say on that basis it kills the platform. Credibility would be shot How would the loss be apportioned? Which investors hold the loan element and the cash element? That's not the investment strategy, not even close, but I'll let stuartassetzcapital decide how much he's willing to release at this stage.
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