littleoldlady
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Post by littleoldlady on Sept 2, 2017 15:54:15 GMT
This whole concept of "keeping it simple" seems like a bit of a collective delusion. It's like people want to keep pretending these are high yielding term depos. The problem is they are the exact opposite. Property platforms, MT included, are offering highly speculative development loans (senior-stretched and subordinated debt). Institutional fixed-income investors, if they have any interest at all (most would not), would typically focus on the safest super-senior tranches. They would steer clear of these types of loans simply because evaluating a product where you have subordinated tranches, counter-party risk, default correlations etc would be too complex. If posters here are clearly so confident as to be able to price all these factors accurately, how is it that something as simple as a loan price-yield relationship on a platform like ABL can confuse them? If you want a KISS model then logically you should be investing via "collective investment scheme" models like Z, RS, FC, AC's GBBA etc. If you want to pick individual loans then surely variable pricing is the least of your problems. You are right, but we still want it as simple as possible. It is quite complicated enough already for the reasons yo so elegantly give. Many of u s would not be considering p2p if FSCS schemes paid a decent rate.
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Post by dan1 on Sept 2, 2017 16:00:19 GMT
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. You are comparing apples with pears. The size of mt and lendy are so different I cannot see their sm operating to freeze point on mt. Fs land increasing discounts is nothing to do with value it is everything to do with fear of being left with carp that defaults as the recovery process is so bad. I think a Lendy like bloating of the SM is probably inevitable at some stage or other. Consider the level of confidence if there were to be a major economic shock and/or property correction, and let's face it both scenarios are overdue (talk of the longest running bull market and don't forget that property prices are market driven with a much longer cycle than equity markets).
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r00lish67
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Post by r00lish67 on Sept 3, 2017 13:00:17 GMT
You are comparing apples with pears. The size of mt and lendy are so different I cannot see their sm operating to freeze point on mt. Fs land increasing discounts is nothing to do with value it is everything to do with fear of being left with carp that defaults as the recovery process is so bad. I think a Lendy like bloating of the SM is probably inevitable at some stage or other. Consider the level of confidence if there were to be a major economic shock and/or property correction, and let's face it both scenarios are overdue (talk of the longest running bull market and don't forget that property prices are market driven with a much longer cycle than equity markets). It has already happened previously - on Brexit day the SM filled up rather rapidly. On that occasion it also dissipated rather rapidly (within 24 hours I think?) - but, still, it can happen. Re: comparing FS/MT, I think your 'fear' is just the more raw form of my 'value'. Some people are suitably unscared to buy loans approaching maturity if offered at a discount. Not me though
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jonah
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Post by jonah on Sept 4, 2017 5:22:39 GMT
I think a Lendy like bloating of the SM is probably inevitable at some stage or other. Consider the level of confidence if there were to be a major economic shock and/or property correction, and let's face it both scenarios are overdue (talk of the longest running bull market and don't forget that property prices are market driven with a much longer cycle than equity markets). It has already happened previously - on Brexit day the SM filled up rather rapidly. On that occasion it also dissipated rather rapidly (within 24 hours I think?) - but, still, it can happen. About three months.. p2pindependentforum.com/thread/5507/current-loan-availability-tracker?page=5&scrollTo=171254
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r00lish67
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Post by r00lish67 on Sept 11, 2017 10:01:45 GMT
I do appreciate that this is unlikely to alter most people's considered opinion, but in any case, I wanted to highlight that the present blockage of the SM w.r.t the non-defaulted Prestbury loans is a perfect example of where allowing small levels of discounting would allow the market to function properly. The recent update wasn't disastrous, just not convincing enough for many investors, and those who have chosen to try and exit now just have to hope that sentiment or demand+supply changes again to arrive at par - which it might, or might not.
NB - this isn't one I happen to hold.
Edit: For those whose main argument was fairness to lenders - given that this one isn't highlighted significantly (Important update etc) is it fair that potentially unsuspecting other lenders may choose to buy this loan without it being discounted given the change of circumstances?
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robski
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Post by robski on Sept 11, 2017 10:56:44 GMT
My biggest fear over discounting is that it could be abused to sell into an ISA at below market rates.
I would much rather the ISA was able to function fully on a platform where its impossible to attempt to sell to yourself into your ISA at a discount, rather than having to discount because people panic in regards an update and want to sell all their holdings. It is of course possible to get round, only allow purchases into an ISA at par for example, but that adds more complexity again.
The way some people are acting here I wonder if it would better to scrap the SM completely and that way drive out some of the people who seem to treat MT as a short term place to deposit cash whilst completely ignoring the real risks of the types of investment they are putting their money into!
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archie
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Post by archie on Sept 11, 2017 11:18:33 GMT
I invest in several platforms with no sm so scrapping it wouldn't particularly bother me. I don't think it would be helpful to MT though.
I'll often invest more when a loan floats to help it complete and then trim down later. Without an sm I'd have to commit a lower amount.
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bg
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Post by bg on Sept 11, 2017 11:49:24 GMT
My biggest fear over discounting is that it could be abused to sell into an ISA at below market rates. But why would you fear over that? Surely unless you are doing it yourself and are worried about being caught it is a metter for the platform and HMRC. It's like worying that people are shoplifting from Sainsburys.
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robski
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Post by robski on Sept 11, 2017 12:37:25 GMT
My biggest fear over discounting is that it could be abused to sell into an ISA at below market rates. But why would you fear over that? Surely unless you are doing it yourself and are worried about being caught it is a metter for the platform and HMRC. It's like worying that people are shoplifting from Sainsburys. Not really no. One does not need to partake in illegal activities to be able to see the ramifications and risks of doing so. As is a well known saying, prevention is better than cure Being rather fond of the platform I tend to prefer to keep it relatively close to what it is now, rather than see it being risked by opening up other avenues that a minority may prefer, that could risk the platform itself. You can tar me as a luddite if you so wish Its something that has to be balanced, we already have some people who say you should be prevented from being able to buy back your own loans on the SM within an ISA. Thats far more likely to be pushed in a scenario where you could sell to yourself below market price. If there is a high risk people could do naughties then there is far more chance of taking a hard line approach to prevent it. As I point out nothing is impossible, but for me getting the ISA imbedded has far more benefit than below par trading on the SM. Its all personal view, there is no right or wrong answer
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jo
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Post by jo on Sept 11, 2017 13:21:37 GMT
Being a fan of open price discovery, I think you should be able to sell at whichever price <you perceive>* to represent value.
(*this could be for a several, not always obvious, reasons).
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ilmoro
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Post by ilmoro on Sept 11, 2017 13:24:11 GMT
But why would you fear over that? Surely unless you are doing it yourself and are worried about being caught it is a metter for the platform and HMRC. It's like worying that people are shoplifting from Sainsburys. Not really no. One does not need to partake in illegal activities to be able to see the ramifications and risks of doing so. As is a well known saying, prevention is better than cure Being rather fond of the platform I tend to prefer to keep it relatively close to what it is now, rather than see it being risked by opening up other avenues that a minority may prefer, that could risk the platform itself. You can tar me as a luddite if you so wish Illegal? The position on this is unclear as there is no specific prohibition with the HMRC guidelines in relation to P2P lending merely interpretations of clauses relating to providers transfering S&S holdings. It is clear that several platforms have the opinion as the result of discussions with HMRC/legal that the transfer via an open market SM is not prohibited.
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littleoldlady
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Post by littleoldlady on Sept 11, 2017 14:22:01 GMT
Not really no. One does not need to partake in illegal activities to be able to see the ramifications and risks of doing so. As is a well known saying, prevention is better than cure Being rather fond of the platform I tend to prefer to keep it relatively close to what it is now, rather than see it being risked by opening up other avenues that a minority may prefer, that could risk the platform itself. You can tar me as a luddite if you so wish Illegal? The position on this is unclear as there is no specific prohibition with the HMRC guidelines in relation to P2P lending merely interpretations of clauses relating to providers transfering S&S holdings. It is clear that several platforms have the opinion as the result of discussions with HMRC/legal that the transfer via an open market SM is not prohibited. Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal.
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robski
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Post by robski on Sept 11, 2017 14:24:37 GMT
Not really no. One does not need to partake in illegal activities to be able to see the ramifications and risks of doing so. As is a well known saying, prevention is better than cure Being rather fond of the platform I tend to prefer to keep it relatively close to what it is now, rather than see it being risked by opening up other avenues that a minority may prefer, that could risk the platform itself. You can tar me as a luddite if you so wish Illegal? The position on this is unclear as there is no specific prohibition with the HMRC guidelines in relation to P2P lending merely interpretations of clauses relating to providers transfering S&S holdings. It is clear that several platforms have the opinion as the result of discussions with HMRC/legal that the transfer via an open market SM is not prohibited. mention of illegal was in response to stealing from Sainsburys
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ilmoro
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Post by ilmoro on Sept 11, 2017 14:41:38 GMT
Illegal? The position on this is unclear as there is no specific prohibition with the HMRC guidelines in relation to P2P lending merely interpretations of clauses relating to providers transfering S&S holdings. It is clear that several platforms have the opinion as the result of discussions with HMRC/legal that the transfer via an open market SM is not prohibited. Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal. What loss? You cant claim a capital loss as no loss has been incurred. Selling cheap isnt a loss.
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bg
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Post by bg on Sept 11, 2017 14:48:42 GMT
Illegal? The position on this is unclear as there is no specific prohibition with the HMRC guidelines in relation to P2P lending merely interpretations of clauses relating to providers transfering S&S holdings. It is clear that several platforms have the opinion as the result of discussions with HMRC/legal that the transfer via an open market SM is not prohibited. Suppose someone with a bot (to make sure nobody else muscles in) sells his loans very cheaply then buys them into his ISA thus exceeding his £20k limit (based on real cost) then claims a capital loss on his non-ISA account to offset against other interest earned. Surely this is sufficiently improper to be illegal. I wouldn't have thought so. In fact if this was a common occurence then I would imagine others would write their own faster bots to try and profit from situations such as this - the market will win in the end. In response to a previoius comment by robski regarding selling at below the market rate....this isn't possible. By definition the price you sell at is the market rate....that's how markets work. Again, if people are trying to put trades through that aren't reflective of where the actual market is then the market will catch them out pretty quickly. This aside, I don't think it's illegal to buy your own parts as long as they are being traded on an open market so there is no need to worry. Even if it was an issue I see no threat to the platforms (FS and ABL certainly dont think so and AC allow discounting and will soon have an ISA). The platforms can easily warn people off or reverse trades they have made with themselves if it ever became an issue. In fact to put peoples minds at rest and as an act of service to the forum, I am happy to pledge that if MT ever allow discounting and people are trying to do this I will write a bot that scours the market for low offers and hoovers them up pronto. All sorted
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