SteveT
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Post by SteveT on Sept 9, 2015 17:42:45 GMT
We appear now to be able to sell loan holdings at a discount of anything up to 99.5% (!). chris, I assume the biggest discounts go to the top of the selling queue for that loan? Is there going to be any mechanism to view how much of a loan is currently listed for sale at what discount or is it simply trial and error until something sells? |
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Post by chris on Sept 9, 2015 19:29:01 GMT
We appear now to be able to sell loan holdings at a discount of anything up to 99.5% (!). chris, I assume the biggest discounts go to the top of the selling queue for that loan? Is there going to be any mechanism to view how much of a loan is currently listed for sale at what discount or is it simply trial and error until something sells? On loans where loan units are available on the aftermarket you'll see them listed in the Manual Investments box on the loan details screen. There's a "Available for instant investment" figure. Click on that figure and it shows the amount available at each discount rate. The aftermarket is processed with greatest discount first as you'd expect. If you set a buy order with a minimum discount of 10% and there's a loan unit available for 20% then it would buy it. Sell orders specify the exact discount offered so if someone wants to buy at 10% or better and you have a sell instruction for 20% then it will sell at 20% instead of hunting for a middle ground.
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Post by Butch Cassidy on Sept 9, 2015 19:44:37 GMT
There is no option between 0 & 1% for discounting a loan, which is equivalent to 1 months interest, could either a manual input option e.g 0.25% or smaller graduations perhaps 0.1% be added?
Selling at 20% + discount will only be needed for extreme cases.
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jonah
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Post by jonah on Sept 9, 2015 19:50:33 GMT
Selling at 20% + discount will only be needed for extreme cases. I think I'd buy almost any AC loan at 99.5% discount. Not so sure that is true on other sites. any takers? 
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sl75
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Post by sl75 on Sept 14, 2015 10:19:49 GMT
We appear now to be able to sell loan holdings at a discount of anything up to 99.5% (!). chris, I assume the biggest discounts go to the top of the selling queue for that loan? Is there going to be any mechanism to view how much of a loan is currently listed for sale at what discount or is it simply trial and error until something sells? On loans where loan units are available on the aftermarket you'll see them listed in the Manual Investments box on the loan details screen. There's a "Available for instant investment" figure. Click on that figure and it shows the amount available at each discount rate. The aftermarket is processed with greatest discount first as you'd expect. If you set a buy order with a minimum discount of 10% and there's a loan unit available for 20% then it would buy it. Sell orders specify the exact discount offered so if someone wants to buy at 10% or better and you have a sell instruction for 20% then it will sell at 20% instead of hunting for a middle ground. On the flip side, how does one discover the amount of buying capacity available for immediate sale on any given loan? If a bunch of investors have already indicated to the system they're willing to buy pieces of various loans at par, at a 1% discount, and at various other discounts, how does someone set the correct discount when selling units of the loan? Does the system operate in the manner that most marketplaces do - i.e. sell at par if there are unfulfilled buy orders at par, even if the seller specified a discount, then sell further units at a 1% discount, and so on, leaving only the unfulfilled order "on sale" at the specified discount, or does it give the difference as an unexpected windfall to those who had already placed orders to buy at for a 1% discount? (or to put it another way, if granny doesn't understand the marketplace, but just selects a big discount because she heard it would make things sell quickly, will she be treated "fairly" by a market where competition between investors means there is lots of buying capacity at a relatively small discount?)
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pikestaff
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Post by pikestaff on Sept 14, 2015 10:32:26 GMT
sl75 I set a buy order to spend £500 on Loan 104 at a minimum discount of 1% which was fulfilled by spending (roughly) £480 at 1% and £20 at 1.5% discount. The fact that I got the £20 at 1.5% implies that the system does its best for the buyer but not the seller. I can't immediately think of a way that it could do its best for both sides at the same time!
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jonah
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Post by jonah on Sept 14, 2015 10:38:03 GMT
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sl75
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Post by sl75 on Sept 14, 2015 10:44:00 GMT
sl75 I set a buy order to spend £500 on Loan 104 at a minimum discount of 1% which was fulfilled by spending (roughly) £480 at 1% and £20 at 1.5% discount. The fact that I got the £20 at 1.5% implies that the system does its best for the buyer but not the seller. I can't immediately think of a way that it could do its best for both sides at the same time! The same way that most other (traditional, regulated) marketplaces do it - if your "buy" order matches unfulfilled "sell" orders, you get the best (i.e. highest discount) "sell" rates offered, and if your "sell" order matches unfulfilled "buy" orders, you get the best (i.e. lowest discount) "buy" rates. If your order is NOT immediately matched in full, the remaining portion stays "on the books" and will be the rate used for the next crossing order... That's how it "should" work, if it wants to be at least as fair as the traditional stock market - how it actually works would be a matter for further experimentation, or for chris to answer. Edit: unless your £20 at a 1.5% discount was not "instant", in which case it implies the market is implemented in a manner that is significantly less fair that most traditional markets.
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pikestaff
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Post by pikestaff on Sept 14, 2015 11:10:40 GMT
sl75 I've got it now! The purchase at a 1.5% discount happened at 4.20 am on 12 September when I was tucked up in bed, so it was not instant. The order was placed some time on 11 September but I can't tell you when, because I don't remember and the order history only shows the date. Edit: The behaviour is consistent with chris's post linked to by jonah. I agree it's not ideal.
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sl75
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Post by sl75 on Sept 14, 2015 14:06:14 GMT
Edit: The behaviour is consistent with chris's post linked to by jonah. I agree it's not ideal. I must have skimmed past the relevant second paragraph... definitely not ideal. ... at least not without some way to prevent people inadvertently selecting far too high a discount. If there are existing "buy" orders on the books, for example, it seems to me that a well-designed system should generally make it difficult to set a discount higher than that which will be immediately matched (or even actively prevent it, except for "sophisticated investors").
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bigfoot12
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Post by bigfoot12 on Sept 14, 2015 16:00:47 GMT
Edit: The behaviour is consistent with chris's post linked to by jonah. I agree it's not ideal. I must have skimmed past the relevant second paragraph... definitely not ideal. ... at least not without some way to prevent people inadvertently selecting far too high a discount. If there are existing "buy" orders on the books, for example, it seems to me that a well-designed system should generally make it difficult to set a discount higher than that which will be immediately matched (or even actively prevent it, except for "sophisticated investors"). I don't think that secondary market of AC should be compared to LSE (I'm not suggesting sl75 was doing, but some were). One attraction of the current system is that it encourages people to place bids at a discount, and at the lowest possible discount they are prepared to accept. They still might get lucky. Some of the other suggestions might discourage people from leaving bids on the system, or only at large discounts. That is not to say there shouldn't be something from stopping people selling at low discount. Perhaps there should be an 'are you sure' at discounts greater than 2.5%, or total discount greater than £10.
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sl75
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Post by sl75 on Sept 14, 2015 16:21:38 GMT
That is not to say there shouldn't be something from stopping people selling at low discount. Perhaps there should be an 'are you sure' at discounts greater than 2.5%, or total discount greater than £10. Buyers are given visibility of what discounts sellers are offering, and "magically" get their specified discount increased to what is already available on the marketplace, so it seems to me only fair that the converse applies. The simplest interface could be an advanced account setting for something along the lines of "allow me to sell loan units at a discount larger than what is immediately available from existing buying orders". Users who have not selected that option would simply be unable to select an excessively large discount (for their own protection), but those who NEED to select a larger discount, for whatever reason (e.g. if selling an unusually large quantity of loan units) could do so.
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mikes1531
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Post by mikes1531 on Sept 14, 2015 19:13:02 GMT
I see that the £30+k of discounted parts in MTFP (#104) have disappeared. Since the available parts total hasn't dropped by much at all, I presume that the seller changed their mind, but I haven't a clue why.
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iren
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Post by iren on Sept 14, 2015 22:50:20 GMT
I see that the £30+k of discounted parts in MTFP (#104) have disappeared. Since the available parts total hasn't dropped by much at all, I presume that the seller changed their mind, but I haven't a clue why. There's been a big drop in units available on the other MTFP tranches today. Tranche 2 is on the verge of being the first to go to O availability. I'd guess the seller raised the funds he wanted from sales on other tranches.
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sl75
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Post by sl75 on Sept 14, 2015 23:08:34 GMT
I see that the £30+k of discounted parts in MTFP (#104) have disappeared. Since the available parts total hasn't dropped by much at all, I presume that the seller changed their mind, but I haven't a clue why. Alternatively, the buyer(s) was/were just looking to flip for a 1% profit, so the same quantity remains on sale? There's been a big drop in units available on the other MTFP tranches today. Tranche 2 is on the verge of being the first to go to O availability... Possibly the work of the QAA? If it buys up all the loan units, it can feed into the excess demand at will!
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