gt94sss2
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Post by gt94sss2 on Nov 10, 2018 11:38:16 GMT
I've stayed out of this discussion as other commitments have kept me busy. However, I regret not making my views known and so will now, even though it seems the decision has already been made.
Firstly, let me say I appreciate (as always) MT's attempt to consult lenders but think the poll was deeply flawed. From memory, the text in the survey money poll was inadequate and unbalanced - especially for lenders who may not follow this forum or be financial 'professionals'. It gave lots of reasons why discounts should be allowed, only 2 reasons why at par should remain, and then a few points on premiums.
There should have, at the very least, more pros/cons of the current system - including the potential CGT impacts of changing - and I fell it was 'leading' voters to vote in favour of discounts.
Someone asked if any BH would reduce their investments if premiums/discounts were introduced and didn't think it would.
Well, my investment in MT varies but as a result of this change, its going to reduce over time - I didn't think of myself as a BH but perhaps I should given how others have described them - I do have 5 figures in certain loans and had more than 5% of Wigan at the end.
I wold have preferred the status quo to remain and think MT has shot itself in the foot, if it wants to attract a wider retail customer base - as illustrated from this thread, this change will favour those who know how to (and have the time) to monitor CH for updates and are familiar with things like risk premiums etc to the disadvantage of others who if they wanted to sell would always do so at par - and unlike the stock market these is no requirement on a P2P platform that relevant news/results is shared publicly to all investors at once.
This change could also lead to ramping etc or other attempts to alter the price - and what happens when someone buys something at a premium only to find a loan is repaid almost immediately - leading to them getting a capital loss.. which is bound to happen at some time..
The issue with MT is not the secondary market which was always a nice to have but that there needs to be more quality loans coming through
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cedarcourtcapital
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Post by cedarcourtcapital on Nov 10, 2018 11:49:39 GMT
To Moneything.....
Now the decision has been made to allow variable pricing, I hope you are going to stop having 'private' chats with privileged lenders over the telephone. You have talked to me in the past, but I have never attempted to elicit anything which may now be price sensitive information. I have read that others have acknowledged your previous unintentional slips.
I am sure you are also aware of the need now for everyone to have the same information at the same time, and of course that means you can no longer provide any updates on this forum before these are available on your web site. I believe you try to do this now, but on occasions you are fallen down, but in the future such unintentional 'slips' could cost the unwary money. I await the first threats of litigation when someone feels out of the loop.
A lot of the advocates of variable pricing have used the stock market as an example of why variable pricing works - supply and demand etc. I am sure everyone is aware of the strict information and disclosure rules which govern those companies whose stock is publicly traded on the stock exchange. As I wrote above I sincerely hope Moneything will now only release information to everyone at the same time - no favourites, just because they call in a lot.
Now onto what I think, from your (Moneything's) point of view will be an unfortunate effect of your move to variable pricing, those people who scream for information about their loans now, will cry every harder in the future, as information could mean profit, or less of a loss. There are people on this forum who diarise every comment you make and demand you provide the update you suggested you would. If you find this demand for information annoying now, just watch what happens in the future. We have discussed what P2P ought to be in a 'perfect' world, one where lenders do their DD on a loan, and if they invest do not chase you for monitoring, trusting that you will do a professional job. You have, in my opinion, created a situation where information will be 'king' and everyone will expect it fairly, I predict you will find silence the fairest information distribution. I will not blame you for this but others will!
Overly dramatic it may prove to be, but just a I said the test of your platform would be when you started having defaults, I believe you will come to rue the decision to bring a whole new information handling regime on yourself. I do not believe I will be alone in being willing to consider action if I am disadvantaged because some lenders seem to have better access to information that comes from you as the source.
Good luck in the brave new world you have taken Moneything into.
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hazellend
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Post by hazellend on Nov 10, 2018 12:08:32 GMT
ABLrate have been offering a flexible SM from the beginning and I have noticed none of the downsides people are concerned about.
The CGT issue is interesting. I haven’t thought that one through too much because I usually don’t sell loans.
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Post by mrclondon on Nov 10, 2018 12:20:30 GMT
The CGT issue is interesting. I haven’t thought that one through too much because I usually don’t sell loans.In most cases CGT applies to loans bought at a discount and redeemed at par by the platform (offset by loans bought at a premium and redeemed at par) Unless you can easily demonstrate to HMRC that your total annual CGT liability is well below the annual allowance, you need to record every such transaction (purchase and redemption/sale).
It is important that those close to / above the annual CGT allowance get their own specialist tax advice - the rules are complex and what applies to one platform's SM does not necessarliy apply to them all. As it stands today I'm not aware of a single p2p platform with a variable priced SM that is providing a tax statement that can be used for CGT purposes.
(for clarity CGT normally applies to all SM purchases that are redeemed/sold at a capital value that differs from the value at purchase. PM puchases are not normally affected, so the PM flippers are excused accounting for CGT).
Where it gets really messy is with loans purchased at a discount that then go on to default. The platform's tax statement will show loss relief at par, but that is probably wrong, with the loss relief actually being restricted to the the discounted price you have paid. (Or if the full loss relief is claimed, there needs to be a CGT charge for the difference between the discounted price paid and par)
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ilmoro
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Post by ilmoro on Nov 10, 2018 12:51:33 GMT
Some relevant discussion here (scroll down)
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eeyore
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Post by eeyore on Nov 10, 2018 13:35:31 GMT
The CGT issue is interesting. I haven’t thought that one through too much because I usually don’t sell loans.In most cases CGT applies to loans bought at a discount and redeemed at par by the platform (offset by loans bought at a premium and redeemed at par) Unless you can easily demonstrate to HMRC that your total annual CGT liability is well below the annual allowance, you need to record every such transaction (purchase and redemption/sale). I think discussion about CGT deserves its own thread and not be buried in MT's proposals for non-par pricing. However, I would point out that for those individuals subject to HMRC's Self Assessment, my understanding is that there are two key requirements to report all transactions: 1. If the net capital gain made in any one tax year exceeds the CGT threshold (£11,700 in 2018/19). 2. If the total volume of transactions* (sales & purchases) in the tax year exceeds four times the CGT threshold. (Obviously, these transactions will cover stocks & shares as well as P2P). So, if your transactions exceed £46,800, even if you've made a net capital loss, you must still submit the record of transactions to HMRC. * ISAs & SIPPs are exempt from CGT so transactions don't need to be included.
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Post by mrclondon on Nov 10, 2018 15:24:42 GMT
MoneyThing , I'm thinking aloud here, but two things occur to me in connection with CGT
a) from the start of the variable priced SM, your db needs to record for each loan part purchase the source (PM/SM) and the actual price paid, with a field in the loan part record for the subsequent capital received on sale/redemption. If the data is there, it can be rendered in whatever format is felt the most appropriate (or downloaded for lenders own number crunching), without it there is no chance.
b) consideration needs to be given to preserving (or in some cases apportioning) the PM/SM flag and purchase price records when a loan is rolled forward on default or partial repayment. And by definition the practise of consolidating loan parts on the roll forward needs to cease, as each part may have different CGT characteristics.
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elliotn
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Post by elliotn on Nov 10, 2018 15:35:20 GMT
Please ensure the capital trading element +/- has identifier in download. Or even an asset statement online.
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elliotn
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Post by elliotn on Nov 10, 2018 15:39:58 GMT
I’d say Ablrate have been wise to stop preserving ranking by offer date when someone changes their offered discount. First in - first out at each level of discount makes sense and keeps things simple. Agree for future sales. But might rile people with existing sale orders who have been in a queue for months that they can't maintain that position at each level of discount (especially if MT choose very large steps of 0.5-1% as some posters prefer). Yes, 0.5% steps. Thanks.
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SteveT
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Post by SteveT on Nov 10, 2018 16:02:29 GMT
As mentioned earlier, no other P2P platform takes it upon itself to keep track of lenders’ capital gains from SM trading, and with good reason. Only a tiny minority of MT lenders will even come close to the CGT reporting thresholds.
MT SM transactions are already ‘clean’ of any accrued interest issues so, provided the account transaction record displays both the £ price paid and the £ capital purchased, it will be simple enough for any large scale SM traders to track their totals for themselves.
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cedarcourtcapital
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Post by cedarcourtcapital on Nov 10, 2018 16:46:51 GMT
Interesting people asking for Moneything to now keep track of a lenders CGT account when they 'wheel and dealt on the new variable pricing secondary market. Why do lenders think this is Moneything's responsibility?
If you operate a non-ISA stocks and shares account with a stockbroker or marketmaker, they provide you with a list of your dealings, deal price etc., but you or your accountant has to computate your CGT liabilities.
For all those advocates of a variable pricing secondary market should be careful what they wished for, if they need assistance with their new found CGT liabilities.
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ptr120
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Post by ptr120 on Nov 10, 2018 17:00:12 GMT
I hope that MoneyThing will limit premiums and discounts to a very narrow range
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SteveT
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Post by SteveT on Nov 10, 2018 17:05:22 GMT
I hope that MoneyThing will limit premiums and discounts to a very narrow range There is no logic to limiting discounts. All that does is guarantee a large, slow-moving queue at the discount “cap” once a loan hits any sort of issues, just as there is at Par today. No problem with capping premiums, at least to ensure yield to term remains positive (one of the complications that led me to vote for discounts only)
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Post by mrclondon on Nov 10, 2018 17:21:47 GMT
Interesting people asking for Moneything to now keep track of a lenders CGT account when they 'wheel and dealt on the new variable pricing secondary market. Why do lenders think this is Moneything's responsibility? If you operate a non-ISA stocks and shares account with a stockbroker or marketmaker, they provide you with a list of your dealings, deal price etc., but you or your accountant has to computate your CGT liabilities. For all those advocates of a variable pricing secondary market should be careful what they wished for, if they need assistance with their new found CGT liabilities. To an extent I agree, however HMRC will expect platforms to provide lenders with adequate data to be able to track their CGT liability on a per transaction (loan part) basis, just as stockbrokers are obliged to do. This is not currently happening
With FS it is impossible to tell which loan parts are PM and SM purchases. If I buy £1000 on the PM and £1000 on the SM then sell one of the £1000 parts on the SM its impossible to know whether the sell transaction needs recording for CGT or not. And that is before the complication of stripping out the interest accruel built into the price. I'm running at around 2000 SM transactions per annum, with around 800 of them liable to CGT.
With AC parts bought at a discount are just merged with all other parts. If you sell part of your holding its impossible to know the correct way of handling the CGT calculation.
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eeyore
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Post by eeyore on Nov 10, 2018 18:18:01 GMT
Only a tiny minority of MT lenders will even come close to the CGT reporting thresholds. Is there any data to show this? I'm sure that many MT investors will also have substantial equity portfolios. Time for a poll? I'm only a small player in P2P (a few tens of thousands spread across a few platforms) but I, for one, have to manage my sale of shares carefully to stay within the annual CGT threshold. I invest in P2P solely for income, not for any capital gain - the antithesis of the "traders" who are probably the most vocal in wanting MT to adopt discounts and premiums.
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