unmadem
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Post by unmadem on Nov 26, 2013 15:44:03 GMT
I am not in favour of positive premiums. I think it has led to some undesirable activity on FC. However it is probably necessary there to provide an underwritting function for some loans. Assetz have, as shown in the other thread on the 3 bridging loans, a number of mechanisms both formal and informal to facilitate this. So better to avoid introduction dealing at a premium and the creation of a flipping culture.
As gingergent says this would be particularly damaging where the prebidding by goldclub members exists. Given that this prebidding provides a valuable service in getting mometum going I would imagine that this will continue (although hopefully with some modifications). Therefore trading at a premium should not.
I can see a case for discount to allow liquidity in cases where it is that is required for whatever reason.
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Post by mrclondon on Nov 26, 2013 20:50:05 GMT
I suspect Assetz have long since concluded we don't like transactions at a premium, but here are a couple of additional thoughts to add to my earlier comments.
Whilst I would prefer zero allowable premium I could just about tolerate 0.35% to cancel out the fees. (But why should the buyer be expected to pay to assist the seller in realising their funds ? )
And another example of the unethical results of having a premium [I've no stake in this one]. FC 4127 a C- 6 month unsecured loan closed recently at MBR of 11.5%. Currently on the secondary market at +1.6% (=5.7%) to +2.0% (=4.2%). Now think about the two 6 month 12% bridging loans of the last 24 hours, and what the secondary market rate would be if allowed to trade at a premium ...
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andy2001
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Post by andy2001 on Nov 26, 2013 21:36:52 GMT
I like having no premium. I've bought more than half my loan parts on the after market. But if it is introduced I may look at flipping some loan parts.
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Post by chris on Nov 26, 2013 21:58:18 GMT
Thanks for all the feedback guys. We are keeping an eye on this thread and I'll be taking a summary of peoples feelings with me to the board meeting on Thursday. Once a final decision has been made I'll be sure to post it here with an explanation of our reasoning.
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Post by bracknellboy on Nov 26, 2013 22:21:25 GMT
Confession time - the ability to sell at a premium can lead to the temptation to indulge in unethical practises. Lets say in a FC thread on this site I happen to notice that someone has pointed out a FC loan is about to be repaid by a new FK loan. What is to stop me listing said FC loan on the secondary market at a 2.8% premium ? Absolutely nothing - and that 2.8% is a straight capital loss to the buyer in 10 days time when the loan is repaid in full. I don't think that anyones own individual inability to resist indulging in what they themselves view as unethical practises in exceptional and rare circumstances should be a reason for deciding what market to construct; and thereby constrain us more moral souls who are in control of such temptations 
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Post by bracknellboy on Nov 26, 2013 22:25:02 GMT
I like having no premium. I've bought more than half my loan parts on the after market. But if it is introduced I may look at flipping some loan parts. yes, but assuming this is a reference to Assetz, would those loan parts be on the after market in the absence of a premium unless there were underwriting fees/premiums. Answer; almost certainly not. So there is a counter argument that in the longer run, and indeed even in the shorter run, the absence of any premium seriously constrains the liquidity/availability of loans in the secondary market for newcomers (especially) to pick up.
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Post by bracknellboy on Nov 26, 2013 22:36:43 GMT
I suspect Assetz have long since concluded we don't like transactions at a premium, but here are a couple of additional thoughts to add to my earlier comments. ... And another example of the unethical results of having a premium [I've no stake in this one]. FC 4127 a C- 6 month unsecured loan closed recently at MBR of 11.5%. Currently on the secondary market at +1.6% (=5.7%) to +2.0% (=4.2%). Now think about the two 6 month 12% bridging loans of the last 24 hours, and what the secondary market rate would be if allowed to trade at a premium ... I'm starting to sound like a proponent for flipping, which I'm not: but I'm just struggling a bit to square the circle of a group of people (us) who are apparently in favour of markets, who in many cases bemoaned the introduction of MBRs on FC on the grounds of artificial market distortion, and who on the other hand seem keen to prevent market dynamics playing in a secondary market. I'm not sure I would consider the above unethical: i would consider downright brazen, and anyone who purchased it an idiot, but that would be my judgement: no-one is forcing anyone to buy that loan part.
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Post by bracknellboy on Nov 26, 2013 22:41:10 GMT
So having got all that off my chest: I come back to other points made. Namely, that with the way AC is currently constructed, and at the stage of development it is in, anything other than small premiums (e.g. fee coverage, radical idea from someone viz a viz 'dead time' compensation), would likely be very problematic. Fixed rate loans, early preferential bidding, automatic dicing into bite size chunks: all sound like a recipe for a hijack by large pocket flippers in the event of good money to be made in the secondary market.
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pikestaff
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Post by pikestaff on Nov 26, 2013 23:01:00 GMT
All of these anti-premium comments ignore the fact that a buyer in the primary market generally has their money tied up for a substantial period of time, but a buyer in the secondary market does not.
It is perfectly fair and reasonable to allow sellers to set a premium that recovers the cost of the dead time (as well as fees). Provided they can do that and no more, the abuses that people are worried about will not come to pass.
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mark
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Post by mark on Nov 27, 2013 8:26:36 GMT
All of these anti-premium comments ignore the fact that a buyer in the primary market generally has their money tied up for a substantial period of time, but a buyer in the secondary market does not. It is perfectly fair and reasonable to allow sellers to set a premium that recovers the cost of the dead time (as well as fees). Provided they can do that and no more, the abuses that people are worried about will not come to I fail also to understand all the anti premium comments and the possible abuse of investors forced to invest in the secondary market. Lets get serious. All invest for the same reason , that is, to make a return on our investments. The main and secondary markets are just that, a market. No one is pressured or made to invest in any market. The option for lenders to trade on the secondary market at a premium should be allowed. If a premium is added to a loan part and you believe it is still a good investment then you should have the right to buy and the seller the right to sell. If there is no market or demand the parts will not sell. I believe the premium restrictions that are being promoted by a few on this forum are alien to the p2p lending business. Whats next interest bans on loans to borrowers to avoid possible borrower abuse.
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Post by jackpease on Nov 27, 2013 9:02:34 GMT
Well i deserted FC because my perception that flippers were distorting the market and if there was no throttles and unfettered aftermarket premiums allowed on Assetz then there's no question that the three recent loans would all have gone to a handful of people - nothing wrong with making money, agreed, but the effect will be to push out small players like me
Somethng isn't right though at the moment. I split my money between Assetz and Funding Knight. Assetz has effectively no loan parts for sale - FK always has a few hundred and I don't feel the market is distorted at FK and its good that people can jump in straight away without dead money on bids.
What about allowing premium's but capping it at 1% (say) which allows for a modest profit to cover costs and effort but would discourage the serial flipping that has spoilt FC?
One thing is for sure. Assetz has grown in 2013 and clearly now grappling with being mainstream (well done on your servers *not* crashing during the recent frenzies by the way) and in a year or two we'll be looking back at this period as 'the good old days' just as we look back fondly at the early days of FC
Jack
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mikes1531
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Post by mikes1531 on Nov 28, 2013 20:25:59 GMT
I fail also to understand all the anti premium comments and the possible abuse of investors forced to invest in the secondary market. No one is pressured or made to invest in any market. The option for lenders to trade on the secondary market at a premium should be allowed. One's position to this issue may depend on how they view the basic idea of the platform. If premiums greater than the 0.35% selling fee were to be allowed, I expect that deep-pocketed flippers would move in and take over. All loans would be funded instantly by the flippers, and anyone who wasn't in a position to make an offer the instant that an opportunity went live would be shut out. The loan parts would then come onto the SM at a premium and everyone else would have to make their AC investment via the SM. Considering the speed at which recent opportunities have been funded, I'd expect the 'market' to settle at a significant premium level. If that's the case, then I'd prefer the benefit of what effectively is the lower returns required by the ultimate investors to go directly to the borrowers rather than the flippers. I remember the days when Zopa had Listings, and lenders bid the rates down to absurdly low levels. It can be argued that nobody forced them to do that, and if they're stupid enough to do it then it's their own fault if they get burnt. But if the platform provider wants to encourage small investors, perhaps they need to build in some safety features -- and keeping the platform from becoming a mecca for flippers would be a step in the right direction IMHO. I have no problems with SM discounts. They'd allow sellers to exit quickly if they need to, or if interest rates rise significantly in the future. Secondary market transactions at par is currently a USP of Assetz, please think very carefully before you move away from this. I agree it's a selling point, but I don't think it's unique. Zopa's Rapid Return feature also passes loan parts onto new lenders at no premium.
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