|
|
Post by savingstream on Dec 14, 2015 17:44:41 GMT
Dear All,
Following various discussions on this forum, we have come up with a possible solution but in the spirit of P2P we thought we should float it on here first for discussion, so nothing is yet decided!
Pre-funding limits will be variable for all depending on:
Existing portfolio of loans;
plus
Cash on account at time of loan going live (we will need to get better at letting you know when they are going live so you can plan accordingly).
E.g - £2m loan - 1: current portfolio of £100k, cash of £15k, they can bid £115k. 2: current portfolio of £20k, cash of £1k, they can bid £21k etc.
We will let everyone have a guaranteed £10k bid in every loan which should accomodate new and small investors plus they can increase their bids by depositing cash to any amount.
We will still have bid limits depending on loan size i.e
This is the fairest solution that we can think of to keep as many people as possible happy.
Appreciate thoughts and comments.
|
|
|
|
Post by marek63 on Dec 14, 2015 17:49:53 GMT
Sounds like a good start. I am only interested in SS avoiding the sense of casino style margin day trading in loans and monitoring the situation carefully. Not allowing unlimited credit to everyone has to be a good start. Quite how the dynamics will work remains to be seen. Are you effectively giving everyone a minimum 10k credit limit on BACS deficit - assuming 100% allocation which seems very reasonable. Is that for each loan? or an overall limit?
|
|
star dust
Member of DD Central
Posts: 2,998
Likes: 3,531
|
Post by star dust on Dec 14, 2015 17:52:29 GMT
That wouldn't have affected any of my pre-bids to date, so if it would quell some very over egged bidders and hence result in more equitable holdings for all, it would suit me fine  . you seem to have an unfinished sentence in there somewhere? "We will still have bid limits depending on loan size i.e "?? In Edit: assume will apply per loan although obviously three in one day might wipe out cash balance on the first and result in slightly less on remaining ones? |
|
SteveT
Member of DD Central
Posts: 6,873 
Likes: 7,918
|
Post by SteveT on Dec 14, 2015 18:08:59 GMT
Questions of clarification:
a) Would the proposed pre-funding limit of "Total portfolio value + value of cash" apply to the entire pipeline in aggregate or to each individual loan in the pipeline?
- if the former, then the limit feels about right but it could involve a lot of shuffling around of individual pre-fund targets as new loans are added to the pipeline. What happens (automatically) if you;re up against the limit and a new pipeline loan is added? Does it just set a zero pre-fund on that loan until other targets are reduced? And what happens if you sell some loans and withdraw the cash (when you're up against the pre-fund limit)?
- if the latter, 100% seems very high. 10% was being proposed previously (on an individual loan basis). Even 25% ought to be ample.
b) what are the proposed "bid limits depending on loan size" ?
|
|
|
|
Post by spareafewcoppersguv on Dec 14, 2015 18:42:12 GMT
I'm new to the board but have been watching and investing in SS and others for a couple of years now.
Allowing everyone to bid 100% of their total portfolio plus cash on hand seems way too much too me without giving some sort of precedence at the lower end. I'm pretty sure it is just going to lead to dissatisfaction of a slightly different nature, and an equivalent but slightly different mess.
Rather than giving everyone the possibility to bid up to £10K minimum on each loan, but still have no guarantee of what they will be allocated, I would much rather see a system where everyone who wants it was guaranteed a minimum amount of say £1000 (or less if that is what they want), with the remainder above that being allocated as it is now. On smaller loans, if £1000 per bidder wanting a piece of the available loan is more than the size of the loan, then scale everyone back the same percentage as is currently done. If not, and on bigger loans, everyone gets the agreed minimum and above that allocate as now.
|
|
star dust
Member of DD Central
Posts: 2,998
Likes: 3,531
|
Post by star dust on Dec 14, 2015 19:17:21 GMT
I'm new to the board but have been watching and investing in SS and others for a couple of years now. Allowing everyone to bid 100% of their total portfolio plus cash on hand seems way too much too me without giving some sort of precedence at the lower end. I'm pretty sure it is just going to lead to dissatisfaction of a slightly different nature, and an equivalent but slightly different mess. Rather than giving everyone the possibility to bid up to £10K minimum on each loan, but still have no guarantee of what they will be allocated, I would much rather see a system where everyone who wants it was guaranteed a minimum amount of say £1000 (or less if that is what they want), with the remainder above that being allocated as it is now. On smaller loans, if £1000 per bidder wanting a piece of the available loan is more than the size of the loan, then scale everyone back the same percentage as is currently done. If not, and on bigger loans, everyone gets the agreed minimum and above that allocate as now. The initial SS model had a £100 minimum allocation which seemed to be favoured by a lot of forum members (including me), but was never implemented. The problem with it is that with the very small loans you would end up with a couple of hundred each, and a £1000 per bidder could take out all £1m to £1.5m loans fairly easily these days too. I think SS feel they need to accommodate some of their deeper pocket lenders by ensuring they can access a range of loans rather than just the mega ones, where in reality they are needed more. It's a balancing act between different categories of lenders, but if their suggestion gets rid of some of the excesses of the current system that have been observed in recent loans (I assume SS know the scale / culprits of this) then coupled with a continuing healthy deal flow I feel it should be an improvement.
|
|
Liz
Member of DD Central
Posts: 2,426
Likes: 1,297
|
Post by Liz on Dec 14, 2015 19:42:11 GMT
100% sounds way too high. It would hardly restrict anyone.
I think this problem may go away once the pipeline gets bussier.
|
|
mike
Member of DD Central
Posts: 187
Likes: 121
|
Post by mike on Dec 14, 2015 19:46:12 GMT
Thanks SS for responding with a proposal. I would have thought having a pre-funding limit on a per loan basis would be easier to manage for users rather than one spread across the entire pipeline. I would set the limit based on the following criteria :
1. Total current loan book is £59M. I'm not sure the current total number of investors but if assume 5000 that works out at £12K each.
2. I would set the limit at 10% of the current loan book + 100% of the cash balance. The average current investor would get £1200 plus new cash invested. This would also allow for investors to sell some current loans to maximize their pre-funding allowance which might encourage more SM supply?
3. New/smaller investors get a min of £1000 pre-funding.
Even though I'm proposing this I'm not totally sure if it's a good approach so feel free to shoot holes in it.
|
|
jamesc
Member of DD Central
Posts: 447
Likes: 253
|
Post by jamesc on Dec 14, 2015 21:26:06 GMT
I think a lot of people are missing the point and I think SS proposal shows this:
One of the best thing about SS is its uncomplicated, one rate for all loans and no premiums on the secondary market. Most people suggestions for the prefunding have involved complicated formulas or at least more complicated than currently. I love the fact its simple and I for one would hate to lose that.
Also the level of prefunding that SS have suggested shows that the level of overbidding, is in some cases on a massive scale probably much more than we suspected! I suggest that the level of pre funding by the majority of members of this forum will not be effected at all by SS suggestion. On the recent PBL 71 I thought I placed a very toppy pre bid but its clear others placed much higher ones as mine was not even half the level of SS's suggestion.
|
|
gt94sss2
Member of DD Central
Posts: 281
Likes: 137
|
Post by gt94sss2 on Dec 14, 2015 21:30:58 GMT
Cash on account at time of loan going live (we will need to get better at letting you know when they are going live so you can plan accordingly). I will reserve judgement on a new system as the more I think of it the less I think one is needed - but then again, I felt the same way about pre-funding in the first place and that has worked relatively well since being introduced One comment though - you will also need to get a lot faster/better at reconciling payments and processing withdrawals if you plan a system based on the cash balance (especially the fact that any payment after 5pm on a Friday does not reach your account until Tuesday)
|
|
paulg
Member of DD Central
Posts: 312
Likes: 189
|
Post by paulg on Dec 14, 2015 21:43:03 GMT
Questions of clarification: a) Would the proposed pre-funding limit of "Total portfolio value + value of cash" apply to the entire pipeline in aggregate or to each individual loan in the pipeline? - if the former, then the limit feels about right but it could involve a lot of shuffling around of individual pre-fund targets as new loans are added to the pipeline. What happens (automatically) if you;re up against the limit and a new pipeline loan is added? Does it just set a zero pre-fund on that loan until other targets are reduced? And what happens if you sell some loans and withdraw the cash (when you're up against the pre-fund limit)?
- if the latter, 100% seems very high. 10% was being proposed previously (on an individual loan basis). Even 25% ought to be ample.I think in practice there would be no difference between whether the pre-fund limit applied to the total pipeline or to individual loans because people would shift all their pre-fund allocation to the loan which was about to be launched. Also if it was applied to the whole pipeline it would discourage anyone from putting a pre-fund on any loan that they didn't think would be fully pre-funded, which wouldn't be helpful to SS. If we have to depart even further from the KISS philosophy than the new website already has then I'd be happy with the percentage figures suggested by savingstream, but I would prefer a return to their original "filling from the bottom up" pre-fund model. Failing that - just leave it as it is.
|
|
|
|
Post by highlandtiger on Dec 14, 2015 22:27:19 GMT
I'm new to the board but have been watching and investing in SS and others for a couple of years now. Allowing everyone to bid 100% of their total portfolio plus cash on hand seems way too much too me without giving some sort of precedence at the lower end. I'm pretty sure it is just going to lead to dissatisfaction of a slightly different nature, and an equivalent but slightly different mess. Rather than giving everyone the possibility to bid up to £10K minimum on each loan, but still have no guarantee of what they will be allocated, I would much rather see a system where everyone who wants it was guaranteed a minimum amount of say £1000 (or less if that is what they want), with the remainder above that being allocated as it is now. On smaller loans, if £1000 per bidder wanting a piece of the available loan is more than the size of the loan, then scale everyone back the same percentage as is currently done. If not, and on bigger loans, everyone gets the agreed minimum and above that allocate as now. The initial SS model had a £100 minimum allocation which seemed to be favoured by a lot of forum members (including me), but was never implemented. The problem with it is that with the very small loans you would end up with a couple of hundred each, and a £1000 per bidder could take out all £1m to £1.5m loans fairly easily these days too. I think SS feel they need to accommodate some of their deeper pocket lenders by ensuring they can access a range of loans rather than just the mega ones, where in reality they are needed more. It's a balancing act between different categories of lenders, but if their suggestion gets rid of some of the excesses of the current system that have been observed in recent loans (I assume SS know the scale / culprits of this) then coupled with a continuing healthy deal flow I feel it should be an improvement. I think rather than being allowed to bid up to your entire holdings, there should be a minimum guaranteed allocation. Obviously this would change regarding the size of the loan. If everyone was guaranteed up to £1000, you will find that there will be a large number of people who wouldn't want as much as that. Those people would then not need to "overbid" in order to get what they want. Which would result in a more accurate and fairer bidding system.
|
|
dawn
Member of DD Central
Posts: 308 
Likes: 275
|
Post by dawn on Dec 14, 2015 22:32:40 GMT
Dear All, Following various discussions on this forum, we have come up with a possible solution but in the spirit of P2P we thought we should float it on here first for discussion, so nothing is yet decided! Pre-funding limits will be variable for all depending on: Existing portfolio of loans; plus Cash on account at time of loan going live (we will need to get better at letting you know when they are going live so you can plan accordingly). E.g - £2m loan - 1: current portfolio of £100k, cash of £15k, they can bid £115k. 2: current portfolio of £20k, cash of £1k, they can bid £21k etc. We will let everyone have a guaranteed £10k bid in every loan which should accomodate new and small investors plus they can increase their bids by depositing cash to any amount. We will still have bid limits depending on loan size i.e This is the fairest solution that we can think of to keep as many people as possible happy. Appreciate thoughts and comments. I would like SavingStream to go with this proposal and to review / tweak it later if necessary. They obviously have a much clearer picture of what has been happening with pre-funding as they can see where and how the over-funding has been happening. I assume therefore that their proposals have been suggested to counter issues they can see but which we lenders can only guess at. I trust them when they say they believe this is the fairest solution they can think of. I believe they want to keep the system as simple as possible whilst being as fair as possible to lenders. I am very glad they have not introduced a '10% of lenders portfolio size' as a limit to pre-funding as this would make it very difficult for small investors to increase their holdings at a reasonable rate (£50-£100 per loan is going to take me a very long time to invest a reasonable amount unless the number of loans going through the pipeline increases substantially).
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Dec 14, 2015 22:51:38 GMT
Crikey! So SS see limiting prefunding to more than doubling one's portfolio as a restriction which will yield a fairer allocation. I was expecting a limit of 10-20% of current portfolio. Some people must have been pre-funding huge amounts if this is going to make any difference..
As there does not seem to be a consensus on an alternative I suggest that SS implement their idea and see what happens.
|
|
|
|
Post by duncandive on Dec 14, 2015 23:10:39 GMT
100% of current portfolio sounds a little crazy to me. Unless you are just starting out of course. If just starting out, then wouldn't it make sense to have a pre-fund limit set to what ever money you can have placed in your account. Why would you bid an amount that you can't cover... Once you have 5 or 10 loans say, then allow a pre-fund of 10% + any money placed in your account. Perhaps the percentage can be tweaked but to set it at 100% just seems to encourage the existing problem of 'Gaming'. May I ask 'How many loans would most folks like to have in their portfolio when it is full, so to speak' ? I would be reasonably happy with 20 good loans and very pleased with between 30 and 40. No way would I want to pre-fund the equivalent of my entire holding into just 'One More Loan'. Being able to pre-fund such a high amount if you have a extensive portfolio surely means that gaming the system can continue.. My understanding would be to have a reasonably even investment level over all the loans in my portfolio. OK... It has been rather a long day for me and I have probably spouted a load of mixed up twaddle. I just felt the need to join in..
|
|
.
