News Briefing - Crowdfunding, SME And Alternative Finance

crowd in a street

1.UK – P2P

The Business Desk reports:

 

“An online business finance platform has been launched by a Leeds-based accountancy and business advisory firm.

The Business Finance Finder platform has been introduced by WGN, supported by Finpoint – a technology provider connecting lenders with businesses. Established in the UK in 2014, Finpoint has connected thousands of SMEs with lenders, with over £286m of loan applications processed to date.”


 

2. UK – P2P

 

CL (Cash Lady) News offers a take on recent FCA moves.

 

‘Britain’s financial watchdog has proposed new regulations designed to offer a greater degree of protection to investors who lend money to individuals and businesses via Peer to Peer (P2P) platforms

P2P lending as we know it today was in many respects a product of the great financial crisis and the recession that followed. As banks reduced their lending to companies and consumers, the vacuum was at least partially filled by online markets that connected a community of lenders to a pool of prospective borrowers. For lenders, the sites offered a means to secure returns that were significantly higher than the interest rates on offer from savings accounts.  Meanwhile, borrowers had an alternative to the High Street Banks.

And the sector has flourished. The P2P Finance  Association (P2PFA)  says its member platforms have been responsible for a cumulative £9bn in lending to date – £660m of that in the first quarter of 2018 – with the money coming from more than 150,000 investors.

It’s not hard to see the attraction. At a time when bank savings accounts are typically paying less than 0.5% in interest, P2P platform lenders can secure returns of between 4% to 7%.  But there are risks. For instance, the borrower may default or the platform itself could become insolvent.

Regulation in the sector has been relatively light touch, with the Financial Conduct Authority (FCA)taking the view that it was important to let innovation flourish in what has become a hugely important segment of the financial services market.  But times are changing. Last week, theFCA signalled that oversight of sector is to be tightened in order to keep pace with developments of in the market.”


 

3. UK – FinTech

 

 

EXMO, a UK-based cryptocurrency exchange operating in multiple fiat and cryptocurrency pairs, announced on Thursday it has expanded its list of accessible trading instruments for active traders and announces the addition of the Cardano (ADA) cryptocurrency to its listing. According to EXMO, users of the platform may now buy and sell cryptocurrencies in the following most popular currency pairs: ADA/BTC, ADA/USD, ADA/ETH. Top-ups and withdrawals for these currency pairs are already available through the Wallet section.

Founded in 2013, EXMO claims it is the #1 cryptocurrency exchange platform in Eastern Europe and one oft he world’s largest global exchanges in volume and liquidity. The company reported it has 1.5 million users, 50,000 active traders, 315,000 daily visitors, 56 trading pairs, 5 fiat currencies (USD, EUR, RUB, PLN, UAH) on the platform. The exchange is currently has locations in London, Kiev, Barcelona and Moscow.

EXMO described Cardano as a decentralized public blockchain and cryptocurrency project and is a fully open source.  It was revealed:

“Cardano is developing a smart contract platform which seeks to deliver more advanced features than any protocol previously developed. It is the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach. ADA represents the future of money, making possible fast, direct transfers that are guaranteed to be secure through the use of cryptography.”


 

4. UK – AltFi

 

AltFi carries a feature explaining that direct lending has helped private debt smash new records.

 

“Private debt assets under management (AUM) have grown to $667bn as of the end of 2017, according to data from Preqin.

With the exception of mezzanine funds, all private debt fund categories have seen their assets under management balloon over this period, with direct lending seeing a notable increase of $47bn in assets under management – a huge annual growth rate of 30 per cent.

Over the past decade the wider private debt market has tripled in size, growing from $204bn as of the end of 2007, with private debt assets having grown year-on-year in almost every year since 2000 with more and entrants and larger deals also apparent.

Preqin says that overall the private debt industry has grown 13 per cent from December 2016, when private debt assets under management had yet to hit $600bn, to the end of 2017.

Within the new total (as at he the end of 2017) of $667bn, $246bn is in 'dry powder' i.e waiting to find a home and $421bn is in the unrealised value of invested assets.

While distressed debt accounts for the largest proportion (32 per cent) of total industry assets, direct lending is gtowing rapidly and is now 30 per cent of the mix. Mezzanine funds account for 22 per cent funds, more or less the bulk of remaining AUM.”

  

5. US – FinTech

 

The best time to buy Bitcoin, according to Yale economists Yukon Liu and Aleh Tsyvinski, is when the price goes up 20% in a week, The Independent reports.

“This is because of strong momentum factors, say the researchers:

“Specifically, we determine that there is a strong time-series momentum effect and that proxies for investor attention strongly forecast cryptocurrency returns.”

In other words, Bitcoin run ups tend to inform themselves, “at least in the short term.” 

The researchers claim this momentum feature in crypto trading is not found often in conventional speculative markets. Crypto markets are behaviorally distinct, say the researchers:

“Cryptocurrency returns can be predicted by factors which are specific to cryptocurrency markets.”

Investors are advised to observe the simple 20% rule, say Liu and Tsyvinski. “This strategy generates outstanding returns,” Tsyvinski told Yale News.

The two economists also estimate that there is only a 0.3% chance that Bitcoin will fall to zero and fail.

The figure is perhaps heartening, but should be considered in context. Liu and Tsyvinski’s similar assessment of the Euro and US dollar found that each is 0.009% and 0.003% likely to fail, respectively.

The two recommend holding between 1 and 6% Bitcoin in one’s investment portfolio because it has tended to do well, they say, with the caveat that, “past performance is not a guarantee of future returns.”

Still, the researchers do not foresee any immediate major changes afoot in crypto trading ecosystems. “Maybe cryptocurrency will completely change its behaviour, but currently the market does not think it will,” said Tsyvinski.

The research was published in The National Bureau of Economic Research.”