ikorodu
Member of DD Central
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Post by ikorodu on May 26, 2016 9:40:22 GMT
So what will happen if someone makes a bid and has not got the funds to cover his purchase? You have to keep the loan part. To rebalance the books you would have to fund the investment or sell a different loan parts (that is over 7 days old) onto the SM. I wonder what happens if a investor doesn't balance the books; how will they be punished. I'd have thought the best way would be to place the unfunded loan part on the secondary market and not pay any interest to the person who was holding it, without paying for it.
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Post by retired2005 on May 26, 2016 9:48:17 GMT
Re: post 3 and the question of whether zero is positive, I think that SS's INTENTION is made (nearly) clear by the qualification in brackets .... i.e that the loan parts have been paid for. I would suggest that they would therefore count zero as positive.
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ben
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Post by ben on May 26, 2016 9:48:42 GMT
You have to keep the loan part. To rebalance the books you would have to fund the investment or sell a different loan parts (that is over 7 days old) onto the SM. I wonder what happens if a investor doesn't balance the books; how will they be punished. I'd have thought the best way would be to place the unfunded loan part on the secondary market and not pay any interest to the person who was holding it, without paying for it. If they do not balance the books I would guess they will do as they have done previosuly removed the loan and not paid any interest on it. The problem the current system had was that someone could buy it hold it for 2 days then sell it without actually paying anything and without it being removed by SS so the account would show up as being balanced and the interest for those two days would be paid.
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nick
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Post by nick on May 26, 2016 9:48:54 GMT
Stops people from snatching up loans they have no intention in funding to get the interest the next day. 7 days seems harsh (on genuine investors) and what about the PM savingstream ? The restriction is on sales and you can only sell on the SM. Fund your purchase immediately (cash or other sales) and then the restriction is lifted. The only thing I'm not sure about here is if you pay for your sales and then later go negative due to a subsequent unrelated purchase. Does the restriction get reinstated on all parts that are less than 7 days old? Yes - it seems like a blanket 7 day restriction on sell 7 day old loans if you have any overall negative balance
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Post by ladywhitenap on May 26, 2016 9:49:49 GMT
I'm not that fussed about the new rule but it does mean we will have to watch and learn some now prediction rules for the degree of scaling that will be applied to new loans.
There will still be a need for a degree of gaming to try and get the desired exposure to each loan.
Whilst the SM remains healthy there is no real problem. Pay up for the over bidding by deposit or selling something else and then re-balance just a bit more work but worth it for the INPL feature that is unique(?) to SS.
LW
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rogerbu
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Post by rogerbu on May 26, 2016 9:51:28 GMT
It's not clear whether the restriction is lifted permanently once a negative balance has been cleared (by selling other parts or depositing cash), or whether all parts less than 7 days old are barred from sale whenever your cash balance is negative. For example: Day 1: Allocated new loan part of £1000 Day 2: Clear the £1000 negative balance (so now free to sell the new loan part) Day 3: Buy £500 of something on the SM, so back to a £500 negative balance Can some of the new loan part be sold, or will it again be blocked from sale? It doesn't make a huge difference either way, but it would be good to know before getting caught out! My guess is that, in the scenario above, the new loan part would again be blocked for sale until Day 8. The rule looks to limit selling of all purchases for 7 days 'Investors will be prevented from selling newly purchased loan parts for 7 days, unless their available funds balance is positive (i.e. the loan parts have been paid for).' including SM purchases.
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am
Posts: 1,495
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Post by am on May 26, 2016 9:58:40 GMT
I don't get it. Why is it good news and why was it bad before? People have been setting their prefunding to a level greater than what they want, and perhaps in excess of what they can pay for, in order to increase their prefunding allocation on oversubscribed loans, in the belief that they can sell the surplus on the secondary market before payment is due. This results in an arms race whereby people ask for bigger and bigger holdings. If this was allowed to continue, at some point someone would find themselves with a loan that they couldn't pay for and couldn't sell. Apart from preventing this it also gives more conservative lenders who only ask for what they point a fairer share of the loans.
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ben
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Post by ben on May 26, 2016 10:11:46 GMT
I don't get it. Why is it good news and why was it bad before? People have been setting their prefunding to a level greater than what they want, and perhaps in excess of what they can pay for, in order to increase their prefunding allocation on oversubscribed loans, in the belief that they can sell the surplus on the secondary market before payment is due. This results in an arms race whereby people ask for bigger and bigger holdings. If this was allowed to continue, at some point someone would find themselves with a loan that they couldn't pay for and couldn't sell. Apart from preventing this it also gives more conservative lenders who only ask for what they point a fairer share of the loans. Be interesting to see the amount we get on the next loan, especially if it is a large loan, smaller loans would probably make no difference
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Post by supernumerary on May 26, 2016 10:12:59 GMT
"We would like to inform investors of a new rule that has now been applied to the secondary market.
Investors will be prevented from selling newly purchased loan parts for 7 days, unless their available funds balance is positive (i.e. the loan parts have been paid for).
This limit is to prevent the abuse we are seeing from investors buying loanparts and selling them without funding them." Interesting developments. I do not believe I have left my account in a negative balance at the end of the day and then gone into the following day accruing interest on that negative balance. I suppose I could of done that on a number of occasions, but I chose not to do so. Let us run through a couple of scenarios. [1] When I invest more money into Saving Stream I try and get it on anything as quickly as possible. So a thousand pounds goes into my Saving Stream account and a loan of 50 days appears and naturally I buy it, because I don’t know what I can get my hands on that day. Then I few hours later I see a loan for 150 days, so I buy that and then I sell the loan of 50 days. Just when I have bought that loan, another loan appears with 300 days left, so I buy that and try to sell the loan that I previously bought that had 150 days left. Would that still be possible? [2] Pipeline loan of 365 days comes on stream and I get an allocation. The previous day however, I invested in a loan of 100 days to go, trying to get my money onto the system as quickly as possible, BEFORE the announcement that the new loans were going to be made available. When I get my allocation, I want to sell my 100 day loan. Would that still be possible? CUE: cooling_dude to the rescue… 
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registerme
Member of DD Central
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Post by registerme on May 26, 2016 10:14:53 GMT
I don't get it. Why is it good news and why was it bad before? People have been setting their prefunding to a level greater than what they want, and perhaps in excess of what they can pay for, in order to increase their prefunding allocation on oversubscribed loans, in the belief that they can sell the surplus on the secondary market before payment is due. This results in an arms race whereby people ask for bigger and bigger holdings. If this was allowed to continue, at some point someone would find themselves with a loan that they couldn't pay for and couldn't sell. Apart from preventing this it also gives more conservative lenders who only ask for what they point a fairer share of the loans. Yes, this. I, for one, have only ever bid for what I actually want in any particular loan. I have never tried to up my pre-funding to increase my allocation. As a result I have become relatively under-invested in SS, and under-invested in loans that I like the look of. I am happy with what SS have done here. I also suspect that the previous situation may have raised eyebrows at the FCA as SS go through the authorisation process, so this may have been in part a response to that, or to pre-empt that.
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Post by trilby on May 26, 2016 10:15:35 GMT
I read this as applying to the secondary market only. Purchases and sales. So it won't be applicable to loan parts obtained through prefunding, which can then be sold immediately they are obtained. Looks like it is the primary market too - my balance is currently (temporarily!) negative and I can't sell the parts of PBL100 that were allocated to me when it went live on Monday.
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warn
Member of DD Central
Curmudgeon
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Post by warn on May 26, 2016 10:20:52 GMT
I read this as applying to the secondary market only. Purchases and sales. So it won't be applicable to loan parts obtained through prefunding, which can then be sold immediately they are obtained....Does anyone else read it the way I do ? Some may, but I don't. I read it as you can't sell any loan parts with an Age < 7 days if your available balance is negative. Doesn't matter how you acquired them. And a good thing too, IMO.
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Post by trilby on May 26, 2016 10:24:32 GMT
Let us run through a couple of scenarios. [1] When I invest more money into Saving Stream I try and get it on anything as quickly as possible. So a thousand pounds goes into my Saving Stream account and a loan of 50 days appears and naturally I buy it, because I don’t know what I can get my hands on that day. Then I few hours later I see a loan for 150 days, so I buy that and then I sell the loan of 50 days. Just when I have bought that loan, another loan appears with 300 days left, so I buy that and try to sell the loan that I previously bought that had 150 days left. Would that still be possible? No, you'll have to sell existing parts before buying new ones to replace them. If you buy the replacement parts first then your balance will be negative so you won't be able to sell the existing parts as you've held them for less than 7 days. No, your balance will be negative after the allocation so you won't be able to sell either the new loan part or the 100 day loan part as you've held them for less than 7 days. Your only option then would be to make a deposit or sell loan parts older than 7 days to resolve the negative balance.
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am
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Post by am on May 26, 2016 10:26:38 GMT
I read this as applying to the secondary market only. Purchases and sales. So it won't be applicable to loan parts obtained through prefunding, which can then be sold immediately they are obtained. Looks like it is the primary market too - my balance is currently (temporarily!) negative and I can't sell the parts of PBL100 that were allocated to me when it went live on Monday. Arguably they should have implemented the restriction only on purchases going forwards, or if that was too finicky, sales made more than 7 days after the announcement. Since not much was allocated on PBL100 I don't expect that people will have trouble paying for that, but there might be someone in the mire with respect to 97 or 98.
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boble
Posts: 150
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Post by boble on May 26, 2016 10:30:05 GMT
I Think this is great news for genuine investors not seeking to "play" the system; however, in order to be completely fair, bank payment credits must now show in the SS accounts in real time. I have email SS to this effect.
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