littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jan 5, 2024 14:13:57 GMT
CrowdProperty’s chief executive has said that access to secondary markets is not a major selling point to peer-to-peer investors, and may even be “dangerous”.
Mike Bristow said that the P2P development lending platform learned through its own investor research that asking for secondary market access is “quite low down” on investors’ list of priorities. He added that the presence of a secondary marketplace could actually harm investors by giving them a false sense of liquidity.
“Bigger picture, secondary markets are dangerous,” Bristow said. “This is why we will not have a secondary market.
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These may be valid points, although I'm not sure about the "selling point" issue, but one of the uses of a secondary market is to exit the platform at the end of one's investment career - a point which will come to all of us. Without one it is a "Hotel California" platform as they never want to crytallise a loss.
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Post by Ace on Jan 5, 2024 15:07:50 GMT
I think he's plain wrong to say that "secondary markets are dangerous". The only justification he could come up with was to say that it could give investors a false sense of liquidity. What he's effectively saying there is that he's not able to adequately educate lenders to understand that they would only be able to sell if there was a willing buyer, which doesn't sound too hard.
I think it would be more accurate to say that they have always been able to easily fill loans so far, so it's not worth the cost of adding an SM at this point.
I'm not particularly bothered about having an SM on CP, but I'd always rather have one than not. Many people consider CP's platform to be too complicated already. Adding an SM would make that more so.
Having an SM wouldn't help much with exiting the platform as you still wouldn't be able to sell your overdue/defaulted loans.
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eeyore
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Post by eeyore on Jan 5, 2024 15:35:24 GMT
I think he's plain wrong to say that "secondary markets are dangerous". The only justification he could come up with was to say that it could give investors a false sense of liquidity. What he's effectively saying there is that he's not able to adequately educate lenders to understand that they would only be able to sell if there was a willing buyer, which doesn't sound too hard. I think it would be more accurate to say that they have always been able to easily fill loans so far, so it's not worth the cost of adding an SM at this point.
I'm not particularly bothered about having an SM on CP, but I'd always rather have one than not. Many people consider CP's platform to be too complicated already. Adding an SM would make that more so. Having an SM wouldn't help much with exiting the platform as you still wouldn't be able to sell your overdue/defaulted loans. I agree. But I'd also suggest that, with CP's typical loans being around twelve months, the necessity for a secondary market is significantly less than if loans were three years in duration.
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benaj
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Post by benaj on Jan 5, 2024 16:06:59 GMT
If I had never picked up any loans with security from SM, I wouldn’t have so many bad memories from failed platforms.
Not totally against SM, but the SM loans are poorly priced on the market, the newcomer wouldn’t be able to access the fair value without extra information when the platform has already hiding them.
When was the last time you could pick up a loan 90% off from the original price?
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jan 6, 2024 18:32:11 GMT
Having an SM wouldn't help much with exciting the platform as you still wouldn't be able to sell your overdue/defaulted loans. Not at par but everything has its price. What would be ideal if platforms were legally obliged to make an offer for loans in certain circumstances eg a portfolio stuck in probate with no way of gettiing a valuation. The platform could offer a peppercorn if that is all they think it was worth so no onerous financial risk to them and it would be useful for other lenders to see just what the platform thought the loans were worth. A useful increase in transparency. Executors of estates could decide whether to accept the offer or hang on in hope but either way they could use the valuation to complete probate..
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Post by willsmithgrrrr on Jan 22, 2024 11:10:19 GMT
CrowdProperty’s chief executive has said that access to secondary markets is not a major selling point to peer-to-peer investors, and may even be “dangerous”. Mike Bristow said that the P2P development lending platform learned through its own investor research that asking for secondary market access is “quite low down” on investors’ list of priorities. He added that the presence of a secondary marketplace could actually harm investors by giving them a false sense of liquidity. “Bigger picture, secondary markets are dangerous,” Bristow said. “This is why we will not have a secondary market. ============================================================================================================== These may be valid points, although I'm not sure about the "selling point" issue, but one of the uses of a secondary market is to exit the platform at the end of one's investment career - a point which will come to all of us. Without one it is a "Hotel California" platform as they never want to crytallise a loss. The thing is as older rates lower than current loans around 10% plenty investors would try and sell. (Perhaps not as easy as so many in default ) However, it could also help investors diversify across more CP loans and lower overall risks . Kufflink never seemed to have any issues with a secondary market causing problems to platform.
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