sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Aug 25, 2017 11:17:08 GMT
Definitely not. Simplicity is why I have most of my funds here. It's usually not difficult to sell. Why should lenders use discounts to queue jump? First queued, first sold. MT would have difficulty selling a new tranche if earlier tranches on the sm are cheaper. This is a very valid point, however, I do believe discount selling of defaulted loan units should be allowed. I'm sure there are lenders who are over-exposed to loans in default and these lenders will lose faith in the platform as a result. There are also lenders who like the idea of buying loans at a big discount despite the risk. So perhaps we should have a new poll, "Should MT introduce discounting of defaulted loans".
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bg
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Post by bg on Aug 25, 2017 11:36:28 GMT
For me, allowing discounts helps avoid liquidity runs on the platform.
For instance look at Lendy. Everything was great, anyone could liquidate anything in a few seconds which meant that all their loans were over subscribed. Now we have passed a knife edge situation where suddenly the SM flipped the other way and people start panicking and listing a lot of loans. This means confidence collapses in the platform and people stop bidding on the PM (as I have done myself). Lendy have pulled this back a bit (mainly by not listing many new loans) but its going to be a nightmare for them to balance liquidity.
Contrast that with FS....there is loads listed on the SM at premiums and discounts but noone cares. Thats just the operation of a perfectly healthy market...every loan finds its level. In fact its good as it allows people to diversify into pretty much any loan they want. People aren't worried about liquidity as hey know they can get out of everything at the right price (I would feel more comfortable if discounts of more than 1% were still allowed but for now its fine).
MT is still in a bit of a honeymoon period (although this is wearing off a bit) where people still have confidence and given there are so few new loans they are all filling fairly easily. I think MT are aware that to grow to any real size and to have long term profitibility they can't allow a flooded SM to happen or that will kill PM sales. For me the only way to do this is to allow selling at a discount.
Let the market find its own level.
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Post by GSV3MIaC on Aug 25, 2017 12:13:19 GMT
Another issue is moving loans into one's ISA. It seems that MT plan to let us sell loans in our regular account and buy the same amounts of the same loans in our ISA account, (provided that the SM is open to all.) Allowing loans to be sold at a discount would enable us to effectively exceed the annual limit, so would be a problem. No, that isn't a problem - if you buy a £1000 loan part for £900 on the SM, into your ISA, you have acquired £900 worth of loan part .. for £900. Nothing has been exceeded. This is only true if it was in an open market situation - if someone was willing to pay £950, but you sold it elsewhere for £900, then you are indeed breaking the rules. That's why there is an 'open market' requirement .. so the price reflects the market value. There are LOTS of loan parts on ABLRATE moving from regular accounts into ISAs at discounts, or premiums .. very few are actually traded at par. Not an issue.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Aug 25, 2017 17:30:42 GMT
Another issue is moving loans into one's ISA. It seems that MT plan to let us sell loans in our regular account and buy the same amounts of the same loans in our ISA account, (provided that the SM is open to all.) Allowing loans to be sold at a discount would enable us to effectively exceed the annual limit, so would be a problem. No, that isn't a problem - if you buy a £1000 loan part for £900 on the SM, into your ISA, you have acquired £900 worth of loan part .. for £900. Nothing has been exceeded. This is only true if it was in an open market situation - if someone was willing to pay £950, but you sold it elsewhere for £900, then you are indeed breaking the rules. That's why there is an 'open market' requirement .. so the price reflects the market value. There are LOTS of loan parts on ABLRATE moving from regular accounts into ISAs at discounts, or premiums .. very few are actually traded at par. Not an issue. I understand, but I am not so sure. It is one thing to turn a blind eye to someone buying their own loans at par by using two browsers at a very quiet time, it would be quite another to ignore people buying their own loans at a big discount, even if it was theoretically possible for someone else to slip in between the buy and sell. I suspect that the authorities would look at the actual facts in such a case, rather than the theoretical possibility.
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r00lish67
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Post by r00lish67 on Aug 27, 2017 11:21:57 GMT
For me, allowing discounts helps avoid liquidity runs on the platform. For instance look at Lendy. Everything was great, anyone could liquidate anything in a few seconds which meant that all their loans were over subscribed. Now we have passed a knife edge situation where suddenly the SM flipped the other way and people start panicking and listing a lot of loans. This means confidence collapses in the platform and people stop bidding on the PM (as I have done myself). Lendy have pulled this back a bit (mainly by not listing many new loans) but its going to be a nightmare for them to balance liquidity. Contrast that with FS....there is loads listed on the SM at premiums and discounts but noone cares. Thats just the operation of a perfectly healthy market...every loan finds its level. In fact its good as it allows people to diversify into pretty much any loan they want. People aren't worried about liquidity as hey know they can get out of everything at the right price (I would feel more comfortable if discounts of more than 1% were still allowed but for now its fine). MT is still in a bit of a honeymoon period (although this is wearing off a bit) where people still have confidence and given there are so few new loans they are all filling fairly easily. I think MT are aware that to grow to any real size and to have long term profitibility they can't allow a flooded SM to happen or that will kill PM sales. For me the only way to do this is to allow selling at a discount. Let the market find its own level. This is all spot on, IMV. I'm really quite surprised at the results of this poll, I would have guessed it'd be the same numbers but the other way around. The main point against doing this seems to be 'Keep it Simple', but what we're talking about here is the ability to offer generally small % increment discounts, so rather than sell your loan part at 100% of the value, you might sell it at 99.5% of its value because you're keen to exit immediately. This is GCSE maths level stuff. I find performing the required financial aspects of the due diligence on all new loans on high-risk platforms such as FS, MT, LY much more complicated than this concept, and so I would really question whether those investors who struggle with this type of 'complexity' are actually investing on the right platforms? If this change isn't implemented, we're almost bound at some stage to see a fully blocked up SM when there's the smallest hint of trouble at mill for perhaps the Hall or the Hotel given their size alone, or when we're close to maturity of either, with some desperate would-be sellers on one side and plenty of potential buyers on the other side unable to meet in the middle. To me, it's a no-brainer.
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r00lish67
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Post by r00lish67 on Aug 27, 2017 11:32:03 GMT
Just to give one concrete example here.
Let's say, hypothetically, that in response to feedback on Birkenhead Ed decides to advise us that the Hall borrower missed a loan repayment last month but has promised to make it up next month.
Now, in the marketplace as it stands there will be an ocean of people who decide that the loan is troubled and will try to sell, with nowhere near enough willing buyers at par to satisfy the demand.
However, as this situation is nowhere near black and white, many people will take the view that although there is added risk, they still believe the security is totally sound. As such, they may be willing to buy lots more if it could be bought at a small discount. In this way, everyone gets what they want, and everyone is better off for it.
As it is, I'm not sure I'd want Ed to provide more information when small problems arise, for fear of scaring the horses!
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snowmobile
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Post by snowmobile on Aug 27, 2017 13:02:47 GMT
Definitely not. Simplicity is why I have most of my funds here. It's usually not difficult to sell. Why should lenders use discounts to queue jump? First queued, first sold. MT would have difficulty selling a new tranche if earlier tranches on the sm are cheaper. This is a very valid point, however, I do believe discount selling of defaulted loan units should be allowed. I'm sure there are lenders who are over-exposed to loans in default and these lenders will lose faith in the platform as a result. There are also lenders who like the idea of buying loans at a big discount despite the risk. So perhaps we should have a new poll, "Should MT introduce discounting of defaulted loans". I too would have preferred an option to vote for discounting of defaulted loans only. As we can currently see with Birkenhead, such loans are unlikely to sell without discounts as an extra incentive. It would need to come with a huge health warning and preferably be on a separate area of the website.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Aug 27, 2017 16:18:35 GMT
I too would have preferred an option to vote for discounting of defaulted loans only. . Defaulted loans are where the most advantage would be from a liquidity viewpoint, however as discussed elsewhere they are also where the worst complications would arise from a tax standpoint. A defaulted loan may be traded several times, possibly in several, pieces, and who will be eligible for the tax relief on the capital loss and who will police that?
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ben
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Post by ben on Aug 27, 2017 17:10:35 GMT
For most type of investments you can buy at a premium/discount, the market sets the price. So personally I believe discounting should be introduced. I would think a lot of people that do not want it are the ones that invest with the intention to sell, rather then a need to sell.
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jcb208
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Post by jcb208 on Aug 27, 2017 17:12:03 GMT
No thanks, don't like FS secondary market and will not use it,the same would apply to MT, exception being discounting of default loans I like the idea of
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archie
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Post by archie on Aug 27, 2017 17:16:58 GMT
I would think a lot of people that do not want it are the ones that invest with the intention to sell, rather then a need to sell. I'd say most people who want it are traders and have no intention of holding.
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metoo
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Post by metoo on Aug 27, 2017 22:31:51 GMT
I invest on platforms with and without discounts/premiums in the secondary market. On balance I think the queue system works well on MT as it is. Buying into a loan should realistically be with the expectation of having to hold to maturity - someone has to. If in the future a bloated secondary market becomes a lasting problem to the extent that it reduces appetite for new loans, the question could be revisited. I can see the arguments for the other viewpoint - another day I might see it the other way.
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Post by df on Aug 28, 2017 0:58:37 GMT
Is there any need for change? I think MT's SM works fine as it is.
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bg
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Post by bg on Aug 28, 2017 9:27:58 GMT
I think that every platform that allows discounts and premiums will have a small group of lenders that will prey upon and profit from, essentially, the ignorance of the hoard. This is point at which I generally leave. Typical or median returns will fall and the Platform or the FCA will change the platform to go automatic to ensure fair treatment for all. This is the point at which I consider returning. This is a pattern we have all seen elsewhere and if and when MT get big enough, they will surely follow. (With apologies to mrclondon ) I don't agree with this. I can't see how allowing discounting would allow a small group to prey on the ignorant hoards. AC allow discounting and I can't say that anyone is being preyed upon. Same with ABL etc etc. All it means is that it is always possible to sell and always possible to buy (if premiums are allowed) which reinforces confidence in the market. Historically an investment type/venue that has remained illiquid has typically died. I really don't buy into the 'fair treatment for all' or everyone should get the same returns idea. It is the opposite of capitalism (I guess this is fairly popular in this country at the moment). Those that deploy their capital well should be rewarded and those that do it badly should lose their money (and the same applies to the businesses themselves). That is how society progresses, leads to capital being allocated effectively and efficiently and prosperiety for the society as a whole. If all capital was allocated automatically then bad business ideas will always get their 'fair share' and resources (and money) will be wasted en masse. By this token a loan which looks dubious should be allowed to go unfilled on a platform instead of being by some sort of autobid. I don't have much sympathy for the ignorant when it comes to P2P lending. If they don't understand the basics/don't know what they are doing or the risks they are taking then they should stick to savings accounts. By the same token I am glad that we are allowed to buy shares in individual companies in the stock market instead of being forced to buy a FTSE-all share index tracker if we want to invest even if it means the igniorant may lose their money on a start up tech company.
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r00lish67
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Post by r00lish67 on Aug 28, 2017 9:49:21 GMT
Is there any need for change? I think MT's SM works fine as it is. Agreed that right at this moment, it's not an issue. But people said exactly the same thing over at Lendy towers - it was great, awesome, everything sold immediately. Until it didn't. Then people complained that they couldn't sell their loans because of a gigantic unmoving queue. This will happen at MT too, even just as the Hall/hotel move naturally to maturity but especially if some bad (but not necessarily defaulting) news comes out of the woodwork for a particular loan. What perhaps isn't appreciated enough also is that by being forced to buy at par on MT's secondary market today, one is often actually buying at poor value because they haven't bought at a discount. If you look over in FS-land, you'll see that on the whole, loans typically are discounted more and more as they move to maturity because of the tail-end risk.
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