blender
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Post by blender on Feb 10, 2017 16:30:03 GMT
Sorry, I thought your question was more basic. I do not know the detail of pausing for amortising loans either.
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james
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Post by james on Feb 10, 2017 17:55:32 GMT
Thank you. Yes, until then I had executed all SM purchases as buys which was not available for this amortising loan. I don't know the rule for when buys are paused so left a bid instead over the loan repayment date. However, someone could certainly accept my offer...twice as I tried to go back in for the lower rate!! Both the bid and offer creation are paused, for about a day, though they might have tweaked that now. I don't know why creating new bids is blocked.
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james
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Post by james on Feb 10, 2017 18:08:03 GMT
I made a bid today but the AER was not visible, I had to edit it afterwards from the Dashboard to get the rate I was willing to pay - does that sound right? That's how it works. Telling you the numbers so you can tweak before creating the bid or offer is on the to do list. You'll also find that you can't edit an offer unless you hold twice as much as the amount you're offering to sell. Tries to verify that you hold enough to do the deal but doesn't add back the offer you're changing first, so it gets double counted. Usually you can deal with this by changing the amount to £2 or starting at £1, then going to full amount later. To sell the last Pound you'll have to cancel the offer and create a new one at the rate you want. Also, I posted a bid for an amortising loan that would not execute at the time. The existing offer 350 at 101.8 and 50 at 102 so I bid at 102 to cover both loan parts expecting the order to be filled at a blended rate. It looks like my bid was snaffled by a different loan holder for the full 102 as the original offers remained available. I will now offer separate bids but was surprised not to be matched to the available offers at the lowest rate first. How long do existing trades normally take to match where Execute is not available or, assuming that depends on repayment date (what days can you not execute on?), how could someone else swoop down on me in the meantime? It never happens automatically. That's on the to do list. You're really supposed to be using the Amount to buy box on the right if you just want to buy at the best rate(s) available now. That will tell you the blended rate, then you can execute or decline the deal. Bid creation is for when you want to ask for a higher AER than the best offer is giving.
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james
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Post by james on Feb 10, 2017 18:50:22 GMT
... and for smallest unit of barter read not an entire shekel but as little as 0.001% (!?!) That means that those involved think that the price is about right and what's happening isn't a price negotiation between buyer and seller but a speed of sale negotiation between multiple sellers. There are a few ways to respond, most sensible to least sensible IMO: 1. Offer a compromise, some for each party. Maybe halve the offer and leave some at the existing rate and some just under the competitors. Gives each a bit of the deal flow instead of trying to take it all. Cutting offer size small enough so that it is a credible split matters here. No point in splitting £1,000 to £500 because that's still an "I want it all" offer. But splitting to £950 at original rate and £50 at the lower rate would credibly be splitting the flow between the parties. The smaller you go, the more credible the split becomes. Incidentally, this is one reason I suggest smallish offer amounts, its generally more friendly between all sellers. If you want to do this you might try something like several offers of say £50 at increments of 0.002 or 0.02 so that at least one person can get in between your bids using the odd values. 2. Ignore it. Buyers turn up eventually. Particularly useful if the low offer isn't for much or if you think it's just someone selling much less than you want to sell. It's not like bottled water where every seller has an effectively unlimited supply, each just has a fixed amount that they want to sell sometime. 3. If you think that the price is unrealistic or want to signal that you will go as low as it takes, use a bigger increment. 4. Buy their offer and raise the price to the one you originally thought of. Particularly interesting if you think the price could be significantly higher without the competition. A variation of 1 would be to buy £50 then underbid £100. That's given your competition £50 of the deal volume and asked for £50 for yourself but it assumes that the people involved are reading the signals correctly. Or tweak and do so something uncommon like £49 to increase the chance that the negotiation intent will be noticed. 5. Carry on swapping at low increments and let the time each is lowest do the sharing of the deal flow. More work but it has the advantage that the relative motivation to sell drives speed of sales. Or whatever else comes to mind that addresses what the competition is really about, sale speed, not price.
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elliotn
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Post by elliotn on Feb 11, 2017 3:29:23 GMT
Thank you. Yes, until then I had executed all SM purchases as buys which was not available for this amortising loan. I don't know the rule for when buys are paused so left a bid instead over the loan repayment date. However, someone could certainly accept my offer...twice as I tried to go back in for the lower rate!! Both the bid and offer creation are paused, for about a day, though they might have tweaked that now. Thank you james, I'm a new fan of abl and finessing my understanding will help this. I even swallowed my FS pride and paid a premium
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SteveT
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Post by SteveT on Feb 11, 2017 7:08:34 GMT
... and for smallest unit of barter read not an entire shekel but as little as 0.001% (!?!) That means that those involved think that the price is about right and what's happening isn't a price negotiation between buyer and seller but a speed of sale negotiation between multiple sellers. You missed my point. Real-world marketplace haggling occurs in units of worthwhile size, ie. shekels rather than grains (dollars rather than cents, rupees rather than paise). But we've been here before...
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james
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Post by james on Feb 11, 2017 12:58:26 GMT
That means that those involved think that the price is about right and what's happening isn't a price negotiation between buyer and seller but a speed of sale negotiation between multiple sellers. You missed my point. Real-world marketplace haggling occurs in units of worthwhile size, ie. shekels rather than grains (dollars rather than cents, rupees rather than paise). But we've been here before... I didn't miss your point. You were comparing two different things. What's happening in one is haggling between buyer and seller over the fair price. At the other it's multiple sellers seeking deal flow while agreeing that the price is about right. That difference is why the sensible step size is also different.
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blender
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Post by blender on Feb 11, 2017 13:13:32 GMT
As the forumite who introduce the market haggling sketch from the Life of Brian, I have to add the fact that Brian was in an extreme hurry to buy the beard disguise because he was being sought by Roman guards, and was inexperienced in trading in that market. The FCA might have thought he needed protection, and I think that with more time and experience Brian might have welcomed the opportunity to bid in parts of a shekel. From my own experience of the Ablrate SM, I personally would prefer to take out the third decimal place, and require bids to be altered by at least 0.01%. The current resolution of one thousandth of one percent is not needed and harder to read. It's a penny in a thousand pounds of principal (or 1 3/4 grains in a thousand shekels).
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james
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Post by james on Feb 11, 2017 14:15:14 GMT
The current resolution of one thousandth of one percent is not needed and harder to read. It's a penny in a thousand pounds of principal Unfortunately it's not always true that the difference is small. A change in the thousandths of capital will often cause a change in the hundredths of the yield even for a young loan. The effects are larger for amortising loans and as the loan gets closer to the end. The not so bright sparks at Bondora used a single decimal place of capital value. That effectively closes the secondary market in the last few months of a loan because the increment is close to or bigger than the total of the remaining interest payments. That sort of thing is why it's not sensible to increase the step size on capital. Needs to be verified that any change to the increment still allows sensible differences in yield throughout the life of a loan. Run the numbers and you'll find that hundredths produce non-trivial changes.
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blender
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Post by blender on Feb 11, 2017 16:01:59 GMT
The Funding Circle SM works pretty well, down to £20 loan parts at the start of a five year amortising loan. The resolution on the FC SM is 0.1%, which is two orders of magnitude more coarse than Ablrate's 0.001%. If trading is stopped in the last month, then I would have thought that 0.01% would be sufficient resolution, assuming you cannot trade principal less that £1. (If I tried to do the sums I would get them wrong).
Note: FC's monthly repayment is not calculated at the time, but is a lifetime schedule for each loan part, with the scheduled monthly interest payment divided in whole pence when a sale takes place. I suppose that makes things simpler - but the AER equivalent, the buyer rate, works well enough with 0.1% resolution - significant change yes. I am saying that 0.01% might be right for Ablrate, not 0.1%.
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stevio
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Post by stevio on Mar 7, 2017 20:51:14 GMT
So just to be clear:
Purely on rate, would I receive a higher return by selling my 10% AB loans (for example at par) and buying 14% APR AB loans (ignoring the listed interest rate on that loan)?
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jfm
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Post by jfm on Mar 7, 2017 22:14:22 GMT
I think you need some more assumptions to answer the question. What will the level of bad debt be on each loan? If the maturity dates are not the same, what will the available reinvestment or sale rate be at the first maturity?
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blender
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Post by blender on Mar 7, 2017 23:39:23 GMT
So just to be clear: Purely on rate, would I receive a higher return by selling my 10% AB loans (for example at par) and buying 14% APR AB loans (ignoring the listed interest rate on that loan)? You mean 14% Yield AER? Purely on rate the answer is yes, though you need to compare the 14% with the AER of the 10% loan sold at par, which will be around 10.5%. However, there is more to it than that. If the 14% AER loan has an interest rate of 10% and has been heavily discounted then the swap is probably a very good deal (assuming that the rate defines the risk). If the 14% AER loan is a 13% loan offered at par, then you have to take a view of the increased risk and the fact that the AER is before tax. If the 14% AER loan is a 16% loan at a premium then you have to take account of the higher risk, the higher tax liability, and the worsened cash flow. If you have a number of loans offered at the same 14% AER and the same end date, then the one which costs you less up front is generally best.
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Post by dan1 on Mar 23, 2017 17:13:15 GMT
Can't quite believe it but I just picked up the last £1 of 58 on offer at 85% (I think there was somewhere in the region of £100 when I first checked, FFF even applies on ABL!). Seems to have been listed just following a repayment of the same loan.
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Post by dan1 on Mar 31, 2017 6:44:20 GMT
Increasing availability of SM offerings at or around par on ABL, and not just the 10% ones. If you're tempted to dip your toe in the ABL water then perhaps there are worse times to get started.
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