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Post by mrclondon on Nov 1, 2018 11:02:05 GMT
Outside of an ISA, the exposure to Capital Gains tax issues will mean that, if implemented, I will move to other platforms. I do not have the time or inclination to make my tax affairs more complex. Hopefully the tax statement would give you all the details you need but I know what you mean Agreed, but unfortunately none of the platforms I'm with that have a variable priced SM do. In general CGT should only apply to loans bought on the SM not on the PM. Any loan part bought on the SM at a discount and then resold at a lower discount / a premium or redeemed by the platform at par needs to be tracked. For many the annual CGT allowance is large enough that a crude rule of thumb calculation will show the capital gains are well within the allowance and hence detailed record keeping can be quietly ignored, however those near or above the CGT allowance need full records.
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Post by mrclondon on Nov 1, 2018 11:14:36 GMT
The FK SM was (probably still is) similiar in concept to that of ABL. One notable feature was it displayed the effective yield of the last 5 (?) transactions, as well as the offers either side of par. This was very helpful when faced with a loan with a load of parts listed at a hefty premium to see that the last five trades were all at par or a small discount and hence the current offers with a premium may not represent a fair price.
One of the issues regarding p2p SMs vs a stockmarket (or even a used car supermarket to pick up on the earlier anology) is the relatively low volume of transactions makes establishing what is a fair market value very difficult. Most p2p lenders are relatively small retail investors without the knowledge and experience to determine for themsleves what a fair price is. If p2p is to remain fully open to retail investors as it is currently, some thought should be given to protecting them from exploitative pricing. I don't know what the answer is, just that retail investors interests must be protected.
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picnicman
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Post by picnicman on Nov 1, 2018 11:36:21 GMT
Hi SteveT (and elliotn ) - value both of your opinions - personally, I will go with the flow as what happens, happens. If it does change, what happens to the existing sale queues needs to be considered. Someone at the front of the queue now needs to be protected from being jumped by the first loan part for sale at a discount surely? I appreciate that may mean at the beginning that change is slow. I do not know the answer and no doubt someone will be unhappy with whatever happens, I am just saying that this needs to be considered by MoneyThing . Any comments welcome - Cheers P You're still at the front of the queue for a par sale - so nothing changes. If someone wants to sell for less then they will get priority. Otherwise nothing has changed. IFISAcava I take your point, except that you are not at the front of the sale queue like you were before? Maybe SteveT post below is an answer? As I said before what happens, happens, as long as the issue has been considered. no doubt we will find out soon Cheers P
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johni
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Post by johni on Nov 1, 2018 12:51:43 GMT
You're still at the front of the queue for a par sale - so nothing changes. If someone wants to sell for less then they will get priority. Otherwise nothing has changed. IFISAcava I take your point, except that you are not at the front of the sale queue like you were before? Maybe SteveT post below is an answer? As I said before what happens, happens, as long as the issue has been considered. no doubt we will find out soon Cheers P So maybe the fairest way to introduce a new system if there is one would be to introduce it only to the loans without queues. That way no one is penalised by the new system.
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ali
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Post by ali on Nov 1, 2018 13:11:24 GMT
[snip]
One of the issues regarding p2p SMs vs a stockmarket (or even a used car supermarket to pick up on the earlier anology) is the relatively low volume of transactions makes establishing what is a fair market value very difficult. Most p2p lenders are relatively small retail investors without the knowledge and experience to determine for themsleves what a fair price is. If p2p is to remain fully open to retail investors as it is currently, some thought should be given to protecting them from exploitative pricing. I don't know what the answer is, just that retail investors interests must be protected.
And this is why I voted no. Yes, it will help liquidity, but at the cost of creating a market that the smart guys can exploit which must mean that "retail investors" (to use MRC's term) lose out overall.
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Post by dan1 on Nov 1, 2018 13:23:54 GMT
Personally I favour discounts, but not premiums. Discounts will improve the liquidity of our assets, allowing a lender to exit for whatever reason, and another lender to gain additional recompense for taking on those loans. I'm thinking that this might be useful if the seller was wanting to close their account, for example, to transfer their IFISA to another provider, or just really needs the money now due to whatever unforeseen circumstance. This provides mutual benefit to both seller and buyer. Premiums, on the other hand, will not help lenders overall, IMHO. Looking at things at a platform level, borrowers are charged interest, which is available to lenders, after MT take their cut, in return for us providing capital. This interest is our (lenders') profit. At the moment we make this profit as interest on loans, but if we allow premiums, then this pot of cash will be divided between interest on loans and profits on sale of loans at a premium. Those lenders with the time, inclination, expertise, cash on hand, fastest fingers (or possibly bots) will benefit from the profit of sales of loans at a discount, whilst those lenders (I suspect the general majority of "normal" lenders) who buy the loans at a premium will be worse off. I think lenders trying to fill an IFISA, or keep it completely re-invested, may be one of the groups of lenders most adversely affected (e.g. you get £30 of interest and want to just put it in a decent loan to start earning again, but find everything half-decent is at a premium). It's tough enough making a decent return on my capital in P2P with unknown defaults, so although MT is my current favourite platform, if they introduce discounting I'll be voting with my feet. MT needs a larger pool of "normal" lenders to fund growth, not reduce its appeal to only those with higher levels of expertise, time and capital. 1) bots are just as much if not more of a problem with the current system where desirable loans are gone in an instant. 2) filling an ISA is even more difficult at the moment where you cant buy anything - the option of a premium would improve liquidity there (at the expense of a bit lower AER)
3) the ability to sell desirable loans at a premium helps cancel out the costs of selling undesirable loans at a discount, benefitting borrowers overall. That's an excellent point IFISAcava and one which I can't recall having been made previously (the rest of the thread is just going over old ground of which I'm guilty myself). With a variable SM you can sell from your taxable account by listing at the greatest discount, you can then buy in your ISA, which will most likely be at the next graduation (0.5/1% on AC, 0.1% on ABL, maybe even 0.001% on Huddle!). It costs you a small amount but is more than offset by the tax advantage whilst maintaining your risk exposure (scrub that, it's actually reducing your risk all the time you continue to receive tax free income). There must be £millions waiting to fund ISAs on MT but can't because they can't shift the loans in their taxable account.
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Post by df on Nov 1, 2018 13:43:46 GMT
IFISAcava I take your point, except that you are not at the front of the sale queue like you were before? Maybe SteveT post below is an answer? As I said before what happens, happens, as long as the issue has been considered. no doubt we will find out soon Cheers P So maybe the fairest way to introduce a new system if there is one would be to introduce it only to the loans without queues. That way no one is penalised by the new system. Well, it depends on the state of loan book at the time of change. As it stands at the moment, I doubt many will want to part with loans that have no queues (at discount, at par or even at premium). If the change is to take a place, the chance of an interim commotion is quite high.
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Post by mrclondon on Nov 1, 2018 14:22:28 GMT
As it stands at the moment, I doubt many will want to part with loans that have no queues (at discount, at par or even at premium). May be. But lets go back a couple of weeks to when MTAC's borrower was struck off. At the time the CH email reached lenders who had subscribed for updates on the borrower there was no queue on any of the loans, and parts listed were snapped up for a few hours after I posted the details on here. Had premiums been allowed I suspect I could have easily sold mine at a generous markup that morning. Given the security at that point was the property of the crown not the borrower (and hence no longer available to cover the loan) it was inevitable that the loan would be suspended from trade at some point when MT verified the position. (Other platforms suspend immediately and then unsuspend if the CH filing is in error.) Anyone who had paid a premium for those loan parts that morning would have lost out as the loan can only be redeemed at par (at best). Too many p2p lenders treat this almost like a game, and downplay (or simply don't understand) the risks. Filed accounts that don't make sense, late filing of accounts & confirmation statements, using false dob or incorrect spelling of name on CH records to disguise past history, failure to discharge planning conditions are all risk factors that can blow up at anytime, paricularly if the exit strategy is refinance by a mainstream/challenger bank who will view such practices in a very dim light. The news flow on loans is almost always bad news. The only irreversible good news is when the platform has received full redemption proceeds. Paying a premium for p2p debt is IMHO a fools errand, as you are only a step away from receiving bad news which will cancel the prospect of recovering the premium in the future. (I'm a glass half full not a glass half empty type of person, so that statement is not tinted with the depressive's outlook on life). That said, when platforms allow premiums I take advanatge of them as a seller to rip off the unwary buyers.
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IFISAcava
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Post by IFISAcava on Nov 1, 2018 14:25:37 GMT
You're still at the front of the queue for a par sale - so nothing changes. If someone wants to sell for less then they will get priority. Otherwise nothing has changed. IFISAcava I take your point, except that you are not at the front of the sale queue like you were before? Maybe SteveT post below is an answer? As I said before what happens, happens, as long as the issue has been considered. no doubt we will find out soon Cheers P Of course - because the system is no longer queue based - it's price based. If you want to sell at the same price (par), you're still at the front of the queue for that price. I think the solution is to have your place in the queue maintained for a given price (e.g. if you were at he front of the queue for par, and you decide to sell at -1%, you should be at the front of the queue at -1% too.
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IFISAcava
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Post by IFISAcava on Nov 1, 2018 14:27:06 GMT
The FK SM was (probably still is) similiar in concept to that of ABL. One notable feature was it displayed the effective yield of the last 5 (?) transactions, as well as the offers either side of par. This was very helpful when faced with a loan with a load of parts listed at a hefty premium to see that the last five trades were all at par or a small discount and hence the current offers with a premium may not represent a fair price.
One of the issues regarding p2p SMs vs a stockmarket (or even a used car supermarket to pick up on the earlier anology) is the relatively low volume of transactions makes establishing what is a fair market value very difficult. Most p2p lenders are relatively small retail investors without the knowledge and experience to determine for themsleves what a fair price is. If p2p is to remain fully open to retail investors as it is currently, some thought should be given to protecting them from exploitative pricing. I don't know what the answer is, just that retail investors interests must be protected.
All a bit paternalistic IMHO.
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andy1
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Post by andy1 on Nov 1, 2018 14:30:56 GMT
[snip]
One of the issues regarding p2p SMs vs a stockmarket (or even a used car supermarket to pick up on the earlier anology) is the relatively low volume of transactions makes establishing what is a fair market value very difficult. Most p2p lenders are relatively small retail investors without the knowledge and experience to determine for themsleves what a fair price is. If p2p is to remain fully open to retail investors as it is currently, some thought should be given to protecting them from exploitative pricing. I don't know what the answer is, just that retail investors interests must be protected.
And this is why I voted no. Yes, it will help liquidity, but at the cost of creating a market that the smart guys can exploit which must mean that "retail investors" (to use MRC's term) lose out overall. I disagree with your classification of lenders as either "retail" or "smart". I consider myself to be both. The amount if money I'm using is definitely NOT institutional level and yet at the same time I understand what a discount and a premium is. I'm also not much of a fan of mollycoddling idiots who think buying into a 12% loan at 120% is a good idea. IMO ABL has the right solution. Any loan can generally always be bought and sold at some price but negative yield offers get blocked. I take mrclondon's point that the market doesn't have enough volume to be really efficient but fair market value has to come down to an agreement between a willing seller and a willing buyer. Isn't that how being an adult in the real world works?
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Post by mrclondon on Nov 1, 2018 14:32:53 GMT
IFISAcava You'd be surprised how often I buy parts on the FS SM at -1% then resell them within a couple of hours at -0.1%.
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IFISAcava
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Post by IFISAcava on Nov 1, 2018 14:41:14 GMT
IFISAcava You'd be surprised how often I buy parts on the FS SM at -1% then resell them within a couple of hours at -0.1%.
Perhaps, but I don't see what's wrong with a bit of arbitrage
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dandy
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Post by dandy on Nov 1, 2018 14:49:26 GMT
With the new FCA rules coming in it would seem that all platforms will have to do one of the following:
1. Have no resale market. 2. Investors to set the price themselves (which must therefore inc premiums) 3. Platform sets the price with sophisticated systems and controls to accurately price at time of transfer. Such systems and controls will cost any platform many millions to implement effectively. So, this will likely result in par only sales with loans being immediately suspended upon a default (with default meaning any loan that has reached its maturity date and/or in arrears)
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r00lish67
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Post by r00lish67 on Nov 1, 2018 15:19:32 GMT
1) bots are just as much if not more of a problem with the current system where desirable loans are gone in an instant. 2) filling an ISA is even more difficult at the moment where you cant buy anything - the option of a premium would improve liquidity there (at the expense of a bit lower AER)
3) the ability to sell desirable loans at a premium helps cancel out the costs of selling undesirable loans at a discount, benefitting borrowers overall. That's an excellent point IFISAcava and one which I can't recall having been made previously (the rest of the thread is just going over old ground of which I'm guilty myself). Ahem, ahem dan1 Having what I'd term a 'proper' functioning SM isn't a panacea to solve all of MT's woes, but IMV it certainly strengthens the platform rather than weakens it. I wavered slightly over whether to vote for premiums and discounts or just discounting, but decided upon premiums and discounts. Reasons being: 1) When some very good news appears e.g. a specified LTV lowers dramatically for whatever reason, it would be useful to still have a market for those loans rather than being snapped up by bots or those with fast fingers. 2) If MT recovers some momentum, then it's conceivable that we could end up with new lenders having very little to buy. Premiums encourage that to be facilitated.
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