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Post by sunspot on Jan 5, 2016 2:59:25 GMT
Whether automation programs (bots) are in use or not, I'm not sure. Nor am I going to discuss the relative merits or difficulties of banning them. Instead, I'm simply going to suggest a workable system that would render them useless, and level the playing field across all users...
Prefunding of the secondary market has been suggested before, but I've not seen anything that looks like it could be translated into useful code, so I'm going to throw in my hat into the ring.
As I see it, three essential elements are required
1) Queueing. i.e when you buy, you automatically move to the back of the queue.
2) Upper and lower limits. i.e. you might agree to buy anything from £100 to £1,000 of a particular loan. So, if £500 became available, and you were first in the queue, you would get the lot, but if £1200 became available, some would be left behind for the next person in the queue.
3) Summation, and an overall budget. i.e. when there's a lot of activity, automated purchases are totalled so as not to exceed an overall spending limit.
Whether a single queue should be used for all loans, or one for each loan is debatable (hence the poll) but I marginally favour a single queue. This would ensure that smaller chunks were left behind for people to buy manually - because no one would want to go to the back of the queue for "shrapnel".
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littleoldlady
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Post by littleoldlady on Jan 5, 2016 8:56:41 GMT
A single queue would mean no control over what you are buying which would not suit most established investors. Multiple queues would require a lot of maintenance, increasing with the SS loan book. This looks quite complicated to code and does not add any value from SS point of view other than (possibly) keeping investors happy.
With the recent allocation change I anticipate there being a reduction in the desirable long term loans on the SM as people have previously been getting allocations bigger than they really wanted so I would suggest not doing anything along these lines until we see how it pans out.
Some people use the risk reduction strategy of selling loans near the end of term, thus pocketing most of the interest and transferring all the risk onto the buyer so there may be short term loans on the SM but this strategy will only work until the first default when SM buyers will cotton on.
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Post by sunspot on Jan 5, 2016 10:00:27 GMT
No, you misunderstand. If when you reach the front of the queue, you have no interest in the next ten (or more) offers, you remain at the front of the queue. You only go to the back of the queue when you actually make a purchase.
Clearly you are not a coder - I am. Neither system would result in any maintenance problems.
The code would be straightforward. As for added value, clearly Saving Stream are concerned about their investors, otherwise they would not have changed the prefunding/allocation system - which also added nothing from a certain point of view.
Currently, the new system applies only to loans below 1 million. Even if it's extended across the board, for larger loans (that are under-subscribed by prefunding) it will still have zero effect.
I'm at a complete loss to see how this is relevant! I think most people will want to see exactly how the first default is handled. For instance, will interest be frozen until the asset is sold? Will a voting system be used to refuse/accept cash offers for the asset below the loan value, or will it go to auction? How will the provision fund be allocated?... All these questions, and more, will be far more relevant to what happens following the first default, than how the secondary market operates.
The current system is basically the "wild wild west" and has no future in a platform that's seeking to expand. On the other hand, if new investors were placed at the front of the queue, my system would allow new users to invest quickly. So from the SS point of view, it DOES add something - it encourages new users.
This system could also be tweaked to make diversification much easier. For instance, if a user sold £2000 of a loan, he/she could be placed at the front of the queue when buying up to the same amount. And for the avoidance of doubt - this would also be easy to code!
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littleoldlady
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Post by littleoldlady on Jan 5, 2016 10:24:04 GMT
No, you misunderstand. If when you reach the front of the queue, you have no interest in the next ten (or more) offers, you remain at the front of the queue. You only go to the back of the queue when you actually make a purchase.
Can you elaborate? Would everyone else be left in limbo until the person at the front of the queue made up their mind? If so how long would they be given before they lost their slot and would they then slip to 2nd or go to the back? Clearly you are not a coder - I am. Neither system would result in any maintenance problems.Now you misunderstand me. I mean the maintenance that the investor would have to do keeping track of his prefunds on an increasing number of active loans. Although it would be optional of course. Currently, the new system applies only to loans below 1 million. Even if it's extended across the board, for larger loans (that are under-subscribed by prefunding) it will still have zero effect.
As a coder you will be aware that any system change carries risk (and costs money) and so unnecessary system changes should be avoided on principle. I'm at a complete loss to see how this is relevant! Because the problem you are addressing only arises if there are desirable loans on the SM. I think most people will want to see exactly how the first default is handled. For instance, will interest be frozen until the asset is sold? Will a voting system be used to refuse/accept cash offers for the asset below the loan value, or will it go to auction? How will the provision fund be allocated?... All these questions, and more, will be far more relevant to what happens following the first default, than how the secondary market operates.
I completely agree. But my point is still valid.
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ablender
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Post by ablender on Jan 5, 2016 10:33:58 GMT
I think that any complex system reduces liquidity. Please do not try to justify how complex or otherwise such a system is by referring to coding algorithms or otherwise. I want a system that I can look at and instantly know were I am.
I have lost a lot of potential buys for loans on my buying list. Still I prefer the simple system as it is now.
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Post by GSV3MIaC on Jan 5, 2016 14:44:45 GMT
I think the AC system, without the shrapnel, would also be rather simple. Basically everyone wanting to buy into loan X says what they want to buy, and if some comes to the market it gets shared out (bottom up, like the initial auction was), iffin it is large enough to give all the punters at least £x (10, 100, pick a -round- number) .. anything left goes to the SM as currently. Having signed up you could go away safe in the knowledge you'd probably get something one day, rather than troubling the server every millisecond. You 'buy' order stays (ticking down by whatever you actually got) until it is either filled, or changed.
You could have a queue such that 'first one to ask is first order filled', which avoids having 'left overs' to send to the SM, but then you need some upper limit on order size or I'll just stick in a million quid buy order on everything and block everyone else (bottom up sharing it out avoids that .. as it did on the initial auction).
This might actually improve (or at least disclose) liquidity, since you (or at least SS, if not you personally) could see the size of the 'buy' queue for each of the loans - not currently available information (although we know it is [too!] large in aggregate)
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ablender
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Post by ablender on Jan 5, 2016 15:16:53 GMT
I think the AC system, without the shrapnel, would also be rather simple. Basically everyone wanting to buy into loan X says what they want to buy, and if some comes to the market it gets shared out (bottom up, like the initial auction was), iffin it is large enough to give all the punters at least £x (10, 100, pick a -round- number) .. anything left goes to the SM as currently. Having signed up you could go away safe in the knowledge you'd probably get something one day, rather than troubling the server every millisecond. You 'buy' order stays (ticking down by whatever you actually got) until it is either filled, or changed. You could have a queue such that 'first one to ask is first order filled', which avoids having 'left overs' to send to the SM, but then you need some upper limit on order size or I'll just stick in a million quid buy order on everything and block everyone else (bottom up sharing it out avoids that .. as it did on the initial auction). This might actually improve (or at least disclose) liquidity, since you (or at least SS, if not you personally) could see the size of the 'buy' queue for each of the loans - not currently available information (although we know it is [too!] large in aggregate) I recently joined AC and I am getting £1 here and £1 there, occasionally I get bigger chunks. What would the big hitters say about such a scheme?
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mikes1531
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Post by mikes1531 on Jan 5, 2016 17:55:08 GMT
I recently joined AC and I am getting £1 here and £1 there, occasionally I get bigger chunks. What would the big hitters say about such a scheme? I haven't a clue how AC and SS compare on issues such as SM size/activity relative to total investor portfolio size, etc., but I will say that after setting targets on a large number of AC loans I was surprised how much activity there was in my account and how all those little bits of shrapnel did start adding up. If you were trying to redeploy, say, up to £100/day the AC system probably would do that for you reasonably efficiently. If you were a BH trying to invest much more than that, then it probably wouldn't be very effective for you.
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ablender
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Post by ablender on Jan 5, 2016 17:57:08 GMT
I recently joined AC and I am getting £1 here and £1 there, occasionally I get bigger chunks. What would the big hitters say about such a scheme? I haven't a clue how AC and SS compare on issues such as SM size/activity relative to total investor portfolio size, etc., but I will say that after setting targets on a large number of AC loans I was surprised how much activity there was in my account and how all those little bits of shrapnel did start adding up. If you were trying to redeploy, say, up to £100/day the AC system probably would do that for you reasonably efficiently. If you were a BH trying to invest much more than that, then it probably wouldn't be very effective for you. It is taking its own sweet time to find loans for £75 in my case.
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mikes1531
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Post by mikes1531 on Jan 5, 2016 19:18:27 GMT
I haven't a clue how AC and SS compare on issues such as SM size/activity relative to total investor portfolio size, etc., but I will say that after setting targets on a large number of AC loans I was surprised how much activity there was in my account and how all those little bits of shrapnel did start adding up. If you were trying to redeploy, say, up to £100/day the AC system probably would do that for you reasonably efficiently. If you were a BH trying to invest much more than that, then it probably wouldn't be very effective for you. It is taking its own sweet time to find loans for £75 in my case. It obviously depends on how many buying instructions you have active. If you're very selective, then it will take longer. Right now, I have 67 buying instructions active. I might not want to increase my positions in all those loans long-term, but it does help putting funds to work. And if you choose your 'parking places' carefully you can turn nearly all of those positions back into cash in a matter of minutes if the amount of your available funds drops below the desired level. But it does require a bit on hands-on account management, and not everyone is willing to put in the time managing their account that I do.
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ablender
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Post by ablender on Jan 5, 2016 19:34:45 GMT
I had 33 instructions. 3 are filled and about 5 partly filled. The rest are untouched.
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Post by GSV3MIaC on Jan 5, 2016 19:41:04 GMT
Which I suspect is 3 more than you'd have got filled investing similar time/effort in the SS SM. Of course if there is nothing selling, and too many buyers, SM order can't get filled no matter what the system (unless you introduce some way of encouraging sales, which has bad side effects). And I do find the minute level of AC Shrapnel rather annoying (they are pro-rataing everything IIRC, rather than filling everything up from the bottom?).
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ablender
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Post by ablender on Jan 5, 2016 19:43:53 GMT
Which I suspect is 3 more than you'd have got filled investing similar time/effort in the SS SM. Of course if there is nothing selling, and too many buyers, SM order can't get filled no matter what the system (unless you introduce some way of encouraging sales, which has bad side effects). And I do find the minute level of AC Shrapnel rather annoying (they are pro-rataing everything IIRC, rather than filling everything up from the bottom?). I have to say that my experience with SS, as at present at least, is more pleasant.
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mikes1531
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Post by mikes1531 on Jan 5, 2016 20:16:01 GMT
And I do find the minute level of AC Shrapnel rather annoying (they are pro-rataing everything IIRC, rather than filling everything up from the bottom?). AIUI, any part offered for sale is divided among all buying instructions. If that would result in sub-£1 shrapnel, they distribute £1 parts randomly among the wannabe buyers. The only sub-£1 transactions should be to accounts that have less than £1 of funds available to use for purchases, or a buying instruction for less than £1. (If there are pence left over after all the £1 parts are distributed then I think they are assigned to one of the lucky buyers rather than being assigned to another buyer randomly.) Having said that, though, I think the existence of AC's 'managed' accounts (GEIA and GBBA) mean there are a lot more accounts with sub-£1 buying orders or only pennies of funds available and this does increase significantly the amount of shrapnel changing hands.
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Post by GSV3MIaC on Jan 5, 2016 21:14:41 GMT
Which I suspect is 3 more than you'd have got filled investing similar time/effort in the SS SM. Of course if there is nothing selling, and too many buyers, SM order can't get filled no matter what the system (unless you introduce some way of encouraging sales, which has bad side effects). And I do find the minute level of AC Shrapnel rather annoying (they are pro-rataing everything IIRC, rather than filling everything up from the bottom?). I have to say that my experience with SS, as at present at least, is more pleasant. Well, fewer dodgy loans, for sure, and the ability to 'buy now, pay later' is a definite plus .. AC requires me to have cash doing nothing behind these 'buy' orders.
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