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Post by pepperpot on Oct 20, 2015 16:20:52 GMT
Afternoon All, Thank you for your suggestions. We intend to make the mechanics of the SM very simple, straightforward & fair. To follow stevet's points: 1) Lenders will be able to sell whole or part holdings in loans. 2) Parts will be bought & sold at par. 3) No fees. 4) Parts will continue to earn interest for the seller until such time as they are purchased. 5) We will implement database locks to mitigate against double purchases. Kind regards, Ed Excellent news, all sounds good. Anticipating a future annoyance, the flip side of being able to split loan parts is we are likely to get many differently sized pieces in the same loan. Could we have the ability to aggregate separate purchases into one loan part? (or a way of seeing the total exposure to an individual loan) thanks!
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paulgul
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Post by paulgul on Oct 20, 2015 16:43:00 GMT
Good news for a newbie like myself, will be able to buy some SM chunks. Assuming somebody wants to sell
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bjorn
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Post by bjorn on Oct 22, 2015 15:10:06 GMT
Excellent news, all sounds good. Anticipating a future annoyance, the flip side of being able to split loan parts is we are likely to get many differently sized pieces in the same loan. Could we have the ability to aggregate separate purchases into one loan part? (or a way of seeing the total exposure to an individual loan) thanks! You'd presumably only get multiple parts if you bought multiple parts in the first place. I think the main requirement here, as you suggest, would be some way to easily see your total exposure to any given loan ... preferably within the SM. Besides the double purchases, that's the only real frustration with Saving Stream's model - you can't see your exposure to the loans on the SM so when something pops up it's not immediately obvious whether you should grab it or not. (And even on the "live loan parts" page on SS there's no per-loan total so it's hard to see what you're under- or over-weight in and you end up having to run your own spreadsheet on the side to keep track). I'd imagine the MT SM will operate much like at SS in that when something pops up for sale it won't be around for long, in which case having a clear indication of your exposure to that loan on the same page would help a lot.
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james
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Post by james on Oct 24, 2015 18:49:15 GMT
Good news for a newbie like myself, will be able to buy some SM chunks. Assuming somebody wants to sell Seller has to give up all of the future income with no recompense for it so it'll presumably just be those trying to exit a loan for some reason, rather than also those who don't particularly want to leave but will for a suitable price. No way to offer discounts for unpopular loans either, so exiting from those might prove hard.
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Investboy
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Post by Investboy on Oct 29, 2015 12:33:02 GMT
james: I'd assume it will work similar to SS. So you're not selling / flipping it for profit but for diversification. ATM I'm just dripping slowly to new loans but a larger pot is waiting but I can't invest. I don't want to just invest all in one or two supercars if I can't reduce my position later and move funds to new or older loans. Also I guess that SM with selling at par may be just a first stage that will make 90% investors happy. Then MT can add bells and whistles, premiums, discounts etc.
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SteveT
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Post by SteveT on Oct 29, 2015 12:46:37 GMT
james: I'd assume it will work similar to SS. So you're not selling / flipping it for profit but for diversification. ATM I'm just dripping slowly to new loans but a larger pot is waiting but I can't invest. I don't want to just invest all in one or two supercars if I can't reduce my position later and move funds to new or older loans. Also I guess that SM with selling at par may be just a first stage that will make 90% investors happy. Then MT can add bells and whistles, premiums, discounts etc. Hopefully sustained demand growth for MT loans will make that needless, as it is on SS
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james
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Post by james on Oct 29, 2015 22:31:45 GMT
james: I'd assume it will work similar to SS. So you're not selling / flipping it for profit but for diversification. I expect diversification to be a substantial reason as long as demand is very high compared to loan supply and a lot of investors are not as diversified as they would like to be. I don't think that's a sustainable driver for a popular secondary market. More sustainable ones that are likely to persist are: 1. exiting the platform 2. selling to take income in drawdown, either in retirement or due to contingeny planning for things like unemployment. The DIY annuity approach in effect. In general* I hate flipping because I view it as a tax on investors charged by traders. It's possible to substantially reduce flipping just by understanding the economics and designing to make the rewards low enough to discourage it, backed up by policy statements and enforcement. The most critical effect is time. To maximise flipping profit you want to sell quickly at the highest achievable markup. 1% markup for a holding time of one day is great. 1% markup for a holding time of a month or three months or six months is not so great. The higher holding times also increase the amount of working capital required to get a particular level of profit, potentially making it impossible for most investors to do a substantial amount of flipping for profit. At three months if you want the same return as for one day you need 90+ times as much money or higher markups or a combination of the two. So an anti-flipping design might feature things like: A. markup caps that start at 1% and increase at 1% per week the investment has been owned, limit raised to 500% after six months. 500% should allow ample marking to cover all future interest and potential penalty or other incidental income. XIRR floor discussed next eliminates the crazy markups while still allowing an exit at capital value plus sum of all future interest payments or less. B. an XIRR cap that doesn't show on the secondary market any loan with a projected XIRR below 0. Zero is because amortising loans with short terms remaining can have very low interest remaining compared to capital value so need to allow low values here to be viable. C. limit to having for sale at a markup no more than 20% of nine months average invested amount (counting missing months as current value for new investors). Which means you can offer for sale 100% of your investments at a markup over five months if they all sell each month if you want to exit or take income but you can't have the very high portfolio turnovers that are likely for flipping-directed trading. This also increase the working capital requirement. Customer service could permit waiving this on request for those exiting the platform, and could enforce that by not allowing it repeatedly for the same person. D. Limit of sale value at markup of no more than 40% of nine months average invested amount as in C. A portfolio turnover limit. E. minimum holding time of one month before a loan can be offered for sale at a premium. Working capital increase measure. Also one of the easier to adjust limits if the measures do not initially prove sufficient. F. No limit on total amount placed for sale during a day/week/month because it is common to successively try at differing premiums or discounts until a sale is achieved and this is important for good market price discovery and achieving a fair price balance between buyer and seller. Someone could easily offer the same loan piece ten times within a month at different prices until a sale is achieved. Those measures will not be sufficient to eliminate all trading-based flipping and allow all longer term investor selling but they should restrict flipping profits very substantially while not impacting those with a longer-term investing approach too heavily. *One platform did persuade me that at their volume of deals it is useful for liquidity provision and beneficial. But I think that this is mostly a transient effect and insufficient long term to compensate for the costs to investors.
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freddy
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Post by freddy on Nov 2, 2015 15:55:39 GMT
Blimey
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ramblin rose
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Post by ramblin rose on Nov 2, 2015 20:10:06 GMT
Blimey Quite. I think you speak for many of those of us who just like things kept simple.
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james
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Post by james on Nov 2, 2015 21:36:24 GMT
Simple is good but so is a secondary market that's really worth using. Takes a bit more complexity to do that without enabling rapid flipping, though most people just wouldn't notice the rules because they wouldn't be affected by them.
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ramblin rose
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Post by ramblin rose on Nov 2, 2015 22:40:37 GMT
Simple is good but so is a secondary market that's really worth using. Takes a bit more complexity to do that without enabling rapid flipping, though most people just wouldn't notice the rules because they wouldn't be affected by them. This is one of those things where one size doesn't fit all, clearly. I've been using the SS SM very regularly since the first few minutes it went live many moons ago. Love it to bits - it's suited my needs perfectly and SMs don't come much simpler. To me, and many others who simply want to buy things when they have the money and sell things when they don't it's been "really worth using" just as it is. Anything more complex, and I'd be put off using it (probably). But obviously that doesn't suit everybody, and you are one of the ones who wants something more. I already do complex things to make money in my non-p2p life and want my p2p non complex, but that's my personal bias - everybody has their own requirements. It clearly isn't difficult or complex to keep a great many people happy, just not everybody. I'm hoping for something simple here, you aren't - hopefully we'll find out soon what we get
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james
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Post by james on Nov 3, 2015 2:55:03 GMT
Simple is good but so is a secondary market that's really worth using. Takes a bit more complexity to do that without enabling rapid flipping, though most people just wouldn't notice the rules because they wouldn't be affected by them. This is one of those things where one size doesn't fit all, clearly. I've been using the SS SM very regularly since the first few minutes it went live many moons ago. Love it to bits - it's suited my needs perfectly and SMs don't come much simpler. To me, and many others who simply want to buy things when they have the money and sell things when they don't it's been "really worth using" just as it is. Anything more complex, and I'd be put off using it (probably). But obviously that doesn't suit everybody, and you are one of the ones who wants something more. I already do complex things to make money in my non-p2p life and want my p2p non complex, but that's my personal bias - everybody has their own requirements. It clearly isn't difficult or complex to keep a great many people happy, just not everybody. I'm hoping for something simple here, you aren't - hopefully we'll find out soon what we get Yes, the SavingStream secondary market is one thing that discourages me from being interested in making much use of SavingStream. I thnk it's too dependent on a shortage of new loans as the driver for its liquidity and I don't expect that to last indefinitely, so I don't have confidence that I could rely on it to exit if I wanted to. Of course forced use of par price is far from the worst exit method I've seen. At the moment I think RateSetter has that dubious honour, having found a way to make the Zopa exit mechanism even more expensive for sellers.
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ablender
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Post by ablender on Nov 3, 2015 8:00:57 GMT
I am with Ramblin Rose on this issue. I like the SS's SM as is. Very simple to use and effective. You buy how much you want and sell how much you want. The fact that there are no fees (on SS) and that transactions happen at par is an even bigger incentive. I have managed to diversify and invest all the money I wanted very easily and relatively quickly. On other platforms I have money which is unused - not so on SS. Another thing which I do not understand. What is wrong with flippers? (BTW I love dolphins)
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star dust
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Post by star dust on Nov 3, 2015 8:42:29 GMT
Yes, the SavingStream secondary market is one thing that discourages me from being interested in making much use of SavingStream. I thnk it's too dependent on a shortage jof new loans as the driver for its liquidity and I don't expect that to last indefinitely, so I don't have confidence that I could rely on it to exit if I wanted to. Of course forced use of par price is far from the worst exit method I've seen. At the moment I think RateSetter has that dubious honour, having found a way to make the Zopa exit mechanism even more expensive for sellers. MT and SS already offer short term 6 month (MT) to up to 12 month (SS) secured loans. Ok the short term loans could run on a bit and take longer to redeem, or even end up in a messy/ lengthy default (that's part of the risk), but in my opinion I'm not expecting a P2P site to offer me 12% paid as monthly interest if I'm not prepared to commit to a 12 or six month loan. A secondary market is a big bonus in my view and whilst I appreciate it is probably very dependant on an increasing investor demand and there could come a point where we all end up having to hold our loans to their maturity, I still don't see the need of non-par or any other highly complicated SM trading on either site myself, and I'm more than happy with what's being proposed here.
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SteveT
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Post by SteveT on Nov 3, 2015 9:25:59 GMT
Another vote for simplicity from me. The only reason why the SM is needed / helpful here is so that established MT lenders feel comfortable pitching larger sums into the new flow of larger MT loans with confidence (as MT continues to grow its lender base) that they will be able to reduce their stakes later to diversify across other new MT loans (not to make additional profit at another lender's expense). This model works extremely well on SS and I look forward to MT following the same approach.
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