trium
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Post by trium on Dec 6, 2018 6:58:56 GMT
I was under the impression that the system will sell discounted loans ahead of those offered for par. I was not therefore expecting to sell against recent orders with respect to loans currently offered by other lenders/underwriters at a discount until those discounted parts had been shifted. I have nevertheless shifted small amounts of 787 and 791, both of which as far as I know have continuously been offered at discount. Obviously I don't mind, but I'm curious to understand what's happening.
Anyone have an explanation?
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IFISAcava
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Post by IFISAcava on Dec 6, 2018 7:59:23 GMT
I was under the impression that the system will sell discounted loans ahead of those offered for par. I was not therefore expecting to sell against recent orders with respect to loans currently offered by other lenders/underwriters at a discount until those discounted parts had been shifted. I have nevertheless shifted small amounts of 787 and 791, both of which as far as I know have continuously been offered at discount. Obviously I don't mind, but I'm curious to understand what's happening. Anyone have an explanation? QAA/30 day/other autoinvest accounts?
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SteveT
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Post by SteveT on Dec 6, 2018 8:10:18 GMT
The automated AC accounts don’t buy discounted parts, only at par. Possibly to avoid causing lenders unexpected CG tax issues.
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trium
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Post by trium on Dec 6, 2018 8:48:16 GMT
Thanks guys I didn't know that  |
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bigfoot12
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Post by bigfoot12 on Dec 6, 2018 14:51:17 GMT
The automated AC accounts don’t buy discounted parts, only at par. Possibly to avoid causing lenders unexpected CG tax issues. Still seems wrong, it should buy from those offering the largest discount, but pay them par.
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star dust
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Post by star dust on Dec 6, 2018 15:50:07 GMT
The automated AC accounts don’t buy discounted parts, only at par. Possibly to avoid causing lenders unexpected CG tax issues. Still seems wrong, it should buy from those offering the largest discount, but pay them par. So who would pocket/hold the extra capital loan parts in that scenario? AC?
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bigfoot12
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Post by bigfoot12 on Dec 6, 2018 15:57:42 GMT
Still seems wrong, it should buy from those offering the largest discount, but pay them par. So who would pocket/hold the extra capital loan parts in that scenario? AC? No one. Both parties trade at par, but those offering the largest discount are at the front of the queue.
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star dust
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Post by star dust on Dec 6, 2018 16:12:03 GMT
So who would pocket/hold the extra capital loan parts in that scenario? AC? No one. Both parties trade at par, but those offering the largest discount are at the front of the queue. Ah see what you mean, well the underwriters would be pleased. I'm not sure the 'average' MLIA holder would be, although a faster exit at a discount might be appreciated, but for the most part I think the ordinary MLIA lender offering a mere few £'s or £k's at a discount manage to trade out fairly quickly already, and they may have less hope/chance of buying into some loans with discounts. I've got some 7% 'ers because there were discounts offered wouldn't have bought otherwise so might have less on the platform.
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IFISAcava
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Post by IFISAcava on Dec 6, 2018 16:39:02 GMT
Still seems wrong, it should buy from those offering the largest discount, but pay them par. So who would pocket/hold the extra capital loan parts in that scenario? AC? pay the sellers the discounted price, sell to the buyers at par, and put the difference in the PF? Would be a good solution, but would no doubt fall foul of some regulations regarding relationship between platform and the loans/lenders.
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Post by chris on Dec 6, 2018 18:10:49 GMT
So who would pocket/hold the extra capital loan parts in that scenario? AC? pay the sellers the discounted price, sell to the buyers at par, and put the difference in the PF? Would be a good solution, but would no doubt fall foul of some regulations regarding relationship between platform and the loans/lenders. That's actually what happens. The automated accounts do trade on discounted loan parts with the difference between the amounts paid going to the PF.
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Post by Ace on Dec 7, 2018 9:07:29 GMT
pay the sellers the discounted price, sell to the buyers at par, and put the difference in the PF? Would be a good solution, but would no doubt fall foul of some regulations regarding relationship between platform and the loans/lenders. That's actually what happens. The automated accounts do trade on discounted loan parts with the difference between the amounts paid going to the PF. In that case the OP is unexplained. Is there a bug somewhere, or was it just a very lucky/unlucky timing coincidence?
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ceejay
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Post by ceejay on Dec 7, 2018 9:37:37 GMT
Not sure if this is a red herring, but I've recently been puzzled in the opposite direction...
I have some loan parts I've been trying to sell. There are no discounted offers on these loans. They're not in any way distressed (no adverse comments or late payments). The only reason I want to sell them is because I'm trying to transfer funds from non-ISA to ISA. Most of the loans I've done this with have behaved as I would expect - they've sold down in little dribbles at varying speeds.
But a couple have sold precisely none. Not a penny. Not even 0.001p.
Odd.
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trium
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Post by trium on Dec 7, 2018 10:28:08 GMT
That's actually what happens. The automated accounts do trade on discounted loan parts with the difference between the amounts paid going to the PF. In that case the OP is unexplained. Is there a bug somewhere, or was it just a very lucky/unlucky timing coincidence? I initially took chris's answer to "unexplain" previous contributions, but I think I get it now. The automated accounts do trade on discounted parts but do not prioritise them. They will therefore buy from me as well as from the discounters. They will then pay par for all parts bought but discounters will only receive the price they've asked for. Think that's it... 
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rscal
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Post by rscal on Dec 7, 2018 12:13:43 GMT
In that case the OP is unexplained. Is there a bug somewhere, or was it just a very lucky/unlucky timing coincidence? I initially took chris's answer to "unexplain" previous contributions, but I think I get it now. The automated accounts do trade on discounted parts but do not prioritise them. They will therefore buy from me as well as from the discounters. They will then pay par for all parts bought but discounters will only receive the price they've asked for. Think that's it... It makes sense for AC to do that as it makes all selling equally liquid (assuming you sell at an average rate in proportion to the amount you are selling whether discounted or not) So the only benefit to discounters comes from individuals looking to buy at discount - a separate source of liquidity - and AC's operations don't obstruct/interfere with those?
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