AC - QAA a staggering 3.75%

If somehow that did happen we'd still have the option to reverse the transactions until the funds were physically withdrawn and paid by the bank. 

Thank you. I didn't realise that it was in the context of a "run".

Actually, in your example, the issue presents itself soon after 50%, as that's the point where there's no guarantee of liquidity (the QAA must sell loans, and the market may not be as liquid at that time as it has been during the time the QAA has been active to date).

The first 50% to demand their funds get paid immediately and in full, the rest are effectively told they'll have to wait until the QAA can sell its loans. [Edit: ... which will lead to an increase in requests to liquidate, as those who were holding funds in the QAA on the expectation that they could be liquidated instantly reverse their decision and decide to hold it in cash instead, the classic "run on the bank" scenario]


In present market conditions, liquidity is instantly available for almost any loan, so the QAA would have no trouble liquidating 99% almost straight away, presumably in the manner you illustrate.

However, a liquidity crisis would occur at a point when almost all investors participating in the other accounts are already fully invested. Whilst I realise it's hard to imagine AC increasing deal flow to the point where investor demand for loan units is saturated, it's occurred previously on other platforms, where cashback incentives have become necessary to get new loans away, and sometimes even those aren't enough.

In such market conditions, it's likely that most existing loans will already be widely available on the SM, so there'd be virtually no demand for the QAA to sell into.

I wonder how much of the QAA total is money waiting to be invested in other AC accounts, and how much is "just sitting there for the 3.75%"?

So I see Zopa are bringing out a (presumably) equivalent "easy access" account on 1 March paying 3-4%.  I wonder how much money will leave AC for that (presumably a fair bit if the rate is >=3.75%)....will it impact AC's ability to underwrite loans?

It's based on the amount actually lent out and held in loan units, which has risen a bit from the long term trend with the drawdown of #227, rather than the absolute amount invested in the account.  No point the provision fund covering the cash portion of the account.  The interest from loans like #227 will fall due soon which will help boost that percentage back up, plus the account is almost always selling down existing positions in loans which again helps the ratio.