SteveT
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Post by SteveT on Nov 4, 2015 10:10:17 GMT
James, there is no doubt that it could be built to work like the Ablrate SM but, aside from you it seems, no-one on here wants or needs that sort of complexity, for the foreseeable future at least.
[Incidentally, I regularly manage to sell parts on the Ablrate SM at AERs that seem ludicrously low to me. I can only assume that other lenders get confused by the Ablrate SM pricing (see thread on the AR forum!) and don't appreciate that buying a loan at 102% of par with just 3 months to run doesn't actually give them anything approaching 14% return]
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ablender
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Post by ablender on Nov 4, 2015 10:20:28 GMT
james: If I understand your argument properly, what you are saying is founded on the lender being in a position to continuously value the security. I do not think that I am in that position so I will still favour a simpler par SM. I'm not sure which of the possible meanings of security you're using so I'll do a two case reply. Case 1: the security for the loan, meaning the building with planning permission or whatever else that will be seized and sold if there is a default. I don't expect anything other than substantial issues like refused planning permission to make much price difference here unless there is a default. Case 2: a security meaning the loan contract. There's no need to continually value this, just if selling or buying to pick a price that seems fair, then if a buyer decide whether to accept that. Or decide to offer to buy at a set price if the market allows buyers to place such offers, then a prospective seller can decide to accept that price or not. If the secondary market has offers to buy then someone who wants to buy at par can make such an offer if they happen not to find one in the list of offers to sell. Ablrate is the only P2P platform I know at present that has both offers to sell and offers to buy and I've made use of both types and transacted with both types. While you may not think you can do it the vast majority of transactions at Bondora that aren't at par show that lots of buyers and sellers are comfortable enough doing it. It was the first case that I was referring to, but it is good that you mentioned the other case as well as it can be relevant. Re: ABLrate, I joined them recently and have to say that their SM confuses me. I cannot get my head round to understand the Yields and AER etc. I understand simple interest rate and how long is left in the term. That is all I need. I leave the rest for more technically (in terms of accounts) able people.
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bjorn
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Post by bjorn on Nov 4, 2015 11:07:28 GMT
Ablrate is the only P2P platform I know at present that has both offers to sell and offers to buy and I've made use of both types and transacted with both types. Interesting that you mention Ablrate as I think it's a classic case study of why not to make a secondary market complicated. In theory it seems like a good idea (just let people set the prices and market forces will do the rest) but I reckon that only works when you have very large volume of transactions and parties transacting. Ablrate isn't anywhere near that yet. You could probably make a case that you could count the number of p2p platforms that have hit that level on one hand. In practice, from what I've observed at AR, the freedom to set offer and bid prices just creates an impasse between sellers wanting to sell at a profit (and then often over the odds as SteveT notes) and buyers who would want to (ideally) buy at something around par or less. I've been signed up for a month or so and haven't once seen anything on the SM for sale at a price that I'd accept. Meanwhile in the same period on SS, I've picked up dozens of loans. The AR model effectively favours people who bought when the loan launched - enabling them to charge over the odds for something that those who join up later or weren't at their screens when the loan launched didn't get a slice of. This is very unhelpful for encouraging new people who are trying to get going on the platform which surely has to be a major objective for AR right now. Maybe once they have 5 loans a week and 10k+ investors, there'd be an argument for pricing at premiums and discounts on the SM and letting market forces do their thing. But not now. For now, I think users would be much better served by an SM model just like at SS. Yes, sellers would be "forced" to only sell at par if they wanted to exit their investments, but how much of a "cost" is that really and in doing so it would have the enormous benefit of allowing buyers on the SM to pick up loans they want at the original price. Many users would seem to agree ... one of the most popular threads on the Ablrate board on this forum is "Secondary Market - why so complicated?" As others have noted james, and respectfully, once again I think you're in the small minority here.
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ablender
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Post by ablender on Nov 4, 2015 11:12:56 GMT
The only thing that I need to add to bjorn's post is that SS does not charge a fee for selling or buying.
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james
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Post by james on Nov 4, 2015 21:53:50 GMT
[Incidentally, I regularly manage to sell parts on the Ablrate SM at AERs that seem ludicrously low to me. I can only assume that other lenders get confused by the Ablrate SM pricing (see thread on the AR forum!) and don't appreciate that buying a loan at 102% of par with just 3 months to run doesn't actually give them anything approaching 14% return] Pretty hard to get that wrong, though, because when you say what you want you're told what the AER and cost are going to be, beyond just the display of the AER on the list of parts for sale. What clearly does happen sometimes at the moment is that newcomers look for lowest markup instead of highest AER because the main listing screen shows markup and not AER. It's entirely possible that I've bought from you at 102%. I've done some buying at that sort of level, as well as some selling. In practice, from what I've observed at AR, the freedom to set offer and bid prices just creates an impasse between sellers wanting to sell at a profit (and then often over the odds as SteveT notes) and buyers who would want to (ideally) buy at something around par or less. I've been signed up for a month or so and haven't once seen anything on the SM for sale at a price that I'd accept. At the moment on the secondary market you can find: An energy-related loan at 99.9%, below par, paying 11% before the effect of the discounted price. However, AERs for amortising loans are not correctly reported at present so the AER is misleading since it should be over 11% and is displayed as just 10.345%. Assorted aircraft-related loans at markup/AER 103.5%/9.490% AER, 104%/9.360%, 101.8%/9.962% 101.5%/8.839% Asssorted bids to buy at 101% through 99%. Assorted container-related loans that used to be available nearer the time they were first introduced at even 14% on the secondary market with lots of transactions at over 12% but it's been a while since those have been available, implying that most keen sellers are now gone, with only "willing to sell but not particularly keen to sell" offers being made. This is part of the market that you don't see at all when sales are at par because there's no reason to offer at all when you're not keen to sell. Ablrate tell people to list even if they are not keen to sell, at whatever price they would be willing to accept. Then the buyers get to decide or to make their own bids. At the moment these loans are are available at 102%/8.537%, 102.325%/8.505% but two of the loans have no offers to sell at all. Bids to buy are at 101.5%/10.724% AER and better. Occasionally I know bids are satisfied because I've sold to bidders myself when I liked a price. I've in the past sold quite a bit at AERs over 12% and even over 14% but I'm not looking to do that at the moment. From the look of it there would be little to buy on the Ablrate secondary market if offers had to be at par, with just one loan having offers at that level or below. That's what I want secondary markets to avoid, by allowing sellers and ideally also buyers to offer prices they would take even when they aren't particularly keen to sell. There's no shortage of deals being done at non-par prices but those deals just don't exist at par-only platforms. Yes, sellers would be "forced" to only sell at par if they wanted to exit their investments, but how much of a "cost" is that really and in doing so it would have the enormous benefit of allowing buyers on the SM to pick up loans they want at the original price. The cost to a buyer is not being able to buy the loans that they want at all, due to lack of any offers to sell at par, because the only reason to sell at par is if you want to get out of the loan anyway. Being able to buy at par does no good at all if there's no seller at par. As others have noted james, and respectfully, once again I think you're in the small minority here. No problem with that when I'm presenting data showing how unpopular par deals are when people are given the choice. Just take a look at those Bondora numbers where only 14.9% of 210k deals were at par. I'm not keen on having potentially 85% of deals forced to use a price other than the one that buyer and seller are willing to deal at. That's a recipe for a market with only 15% of possible deals happening.
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SteveT
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Post by SteveT on Nov 4, 2015 22:54:18 GMT
[Incidentally, I regularly manage to sell parts on the Ablrate SM at AERs that seem ludicrously low to me. I can only assume that other lenders get confused by the Ablrate SM pricing (see thread on the AR forum!) and don't appreciate that buying a loan at 102% of par with just 3 months to run doesn't actually give them anything approaching 14% return] Pretty hard to get that wrong, though, because when you say what you want you're told what the AER and cost are going to be, beyond just the display of the AER on the list of parts for sale. What clearly does happen sometimes at the moment is that newcomers look for lowest markup instead of highest AER because the main listing screen shows markup and not AER. It's entirely possible that I've bought from you at 102%. I've done some buying at that sort of level, as well as some selling. I somehow doubt it's you that's been buying container loan-parts from me at 8.5 / 8.8% AER
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james
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Post by james on Nov 6, 2015 17:15:21 GMT
Pretty hard to get that wrong, though, because when you say what you want you're told what the AER and cost are going to be, beyond just the display of the AER on the list of parts for sale. What clearly does happen sometimes at the moment is that newcomers look for lowest markup instead of highest AER because the main listing screen shows markup and not AER. It's entirely possible that I've bought from you at 102%. I've done some buying at that sort of level, as well as some selling. I somehow doubt it's you that's been buying container loan-parts from me at 8.5 / 8.8% AER You're wrong about that. Look at the transaction at 04/11/2015 19:52 as an example.
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SteveT
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Post by SteveT on Nov 6, 2015 17:29:25 GMT
I somehow doubt it's you that's been buying container loan-parts from me at 8.5 / 8.8% AER You're wrong about that. Look at the transaction at 04/11/2015 19:52 as an example. Fair enough, but what's the attraction at that price?
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james
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Post by james on Nov 6, 2015 17:46:23 GMT
Fair enough, but what's the attraction at that price? This borrower has loans there with these maturity dates: 08/12/2015 (rarely if ever available on the secondary market these days at any price) 28/01/2016 (rarely if ever available on the secondary market these days at any price) 11/03/2016 01/04/2016 The business model of the borrower is to buy containers to resell, usually with a buyer already arranged, so it's a nice stable bit of business that has been working out well. Compare that range of maturities with the interest rates available on short term deals like the monthly markets offered by some platforms and they still look reasonably attractive at some prices available on the secondary market today. I put a fair bit into the original one ending on 8/12 because that happens to work well for VCT buying season as a place to park money for a while. The two that are still available end close to the end of the tax year and may be convenient for that reason, say if someone wants predictable end before the new ISA year starts. I also accept Ablrate's suggestion that they want people to list things at the price they would be willing to sell at even if they aren't particularly keen to sell. While I don't do that for anything like all of the money I have invested over there I do do it for some. Maybe someone will like the price I'm willing to sell at and I'll make a capital gain. Or not. (shrug) Since I'm just willing rather than keen to sell, either way is OK.
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webwiz
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Post by webwiz on Nov 7, 2015 9:03:38 GMT
If you guys are going to continue this debate would you mind shifting to the ablrate forum?
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james
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Post by james on Nov 7, 2015 9:50:48 GMT
If you guys are going to continue this debate would you mind shifting to the ablrate forum? It's about secondary market design and mistaken expectations of what actually happens when non-par deals are available so it belongs here where there is not yet a secondary market, not there where it already exists. Specifically, rebutting claims that the deals they saw above par were mistakes when they were actually deliberately done deals, including buys by me. Since that most recent post the highest yielding deals on the two available container loans have gone so I assume that some buyer thought that 102% at 8.44% yield and 102.325% at 8.418 yield made sense for them. That leaves deals at about 8% as highest for those two loans at the moment.
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ablender
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Post by ablender on Nov 7, 2015 14:51:30 GMT
APLrate's SM is the only thing that I dislike there. I cannot get my head round how it works. I hope that when an SM is implemented here it will be based on the annual interest not yields or percentages as in MT. The SM that I really like is the one from SS; simple, free, quick.
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acky
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Post by acky on Nov 13, 2015 18:36:38 GMT
Are we still expecting the SM to be live by the end of November as Ed stated on page 1 of this thread three weeks ago?
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paulgul
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Post by paulgul on Nov 13, 2015 18:38:43 GMT
Are we still expecting the SM to be live by the end of November as Ed stated on page 1 of this thread three weeks ago? From Ed earlier this morning in another thread: Morning,
Having just been catching up Shuang this morning, the SM is still on track for launch at the end of this month. (The only risk that it could overunn by a couple of days only if anything significant is identified during testing during the week commencing the 23rd).
Kind regards,
Ed
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Steerpike
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Post by Steerpike on Nov 13, 2015 19:45:27 GMT
To bid larger sums, is it a secondary market that we need or reassurance that MT has all of the resources in place that may be required to deal with all potential aspects of loans of this type and size?
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