dead-money
Rocket to the Moon
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Post by dead-money on Aug 8, 2019 21:34:47 GMT
So within the MLA does anyone have any pointers as to how to better determine the liquidity of a loan on the secondary market? It seems that availability is a poor indicator of liquidity, specifically the time lag to invest or divest from a loan.
By example for £1K apportionments,
Loan with zero availability - result same day fully invested Loan with £500K availability - week later still not fully invested
Loan with zero availability - week later still not fully divested Loan with £500K availability - fully sold same day
These were all property development loans with interest rates above 8%
What other measures can help in determining liquidity? Time to redemption ?
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ceejay
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Post by ceejay on Aug 9, 2019 9:04:21 GMT
So within the MLA does anyone have any pointers as to how to better determine the liquidity of a loan on the secondary market? It seems that availability is a poor indicator of liquidity, specifically the time lag to invest or divest from a loan.
By example for £1K apportionments,
Loan with zero availability - result same day fully invested Loan with £500K availability - week later still not fully invested
Loan with zero availability - week later still not fully divested Loan with £500K availability - fully sold same day
These were all property development loans with interest rates above 8%
What other measures can help in determining liquidity? Time to redemption ?
Availability isn't a great indicator, partly because of the asymmetric behaviour of the Access accounts. But its not a bad one. As it happens I have been shuffling funds recently, and put about half of my MLA holdings up for sale. After about a week, every single sale where there was zero availability has, as you would expect, been completely fulfilled. The phenomenon you mention of "Loan with £500K availability - fully sold same day" is almost certainly due to Access account holdings which are available for purchase. I don't have very recent experience doing a lot of buying, so can't comment on the oddity of "Loan with £500K availability - week later still not fully invested". Possibly a very popular loan with very high turnover?? But to answer your actual question - no, I don't think there is a better indicator.
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thedog
Member of DD Central
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Post by thedog on Aug 9, 2019 12:35:14 GMT
Agree with above about instant sales when lot appears available. MLA sales seem to get priority over Access Account underwrites being sold down (which is a very good thing....)
I did have a similar situation to "500k available but I'm not invested" and I think I recall it was a new loan which I guessed at the time was still held up in the underwrite for some reason. Cleared suddenly one day. Dumb question - but you do have funds in your account to buy with?? (Sorry....  )
And yes, it's still the best indicator I've found (coupled with discount which you can monotor via another thread on here).
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dead-money
Rocket to the Moon
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Post by dead-money on Aug 11, 2019 8:00:09 GMT
Yes that's a possibility; was seeking to sell several loans with short term remaining and reinvesting in newly released / loans with longer term remaining. with just a small float sitting in the MLA.
By example 3 loans looking to sell down £1K each, 3 loans looking to buy £1K of each.
If one loan sells in full, does algorithm seek to spread even across 3 loans seeking to buy, or does it fill the first and then have nothing left for the others? Also do all sells occur, before all buys? or does system step through loans seeking to match buyers and sellers?
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ceejay
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Post by ceejay on Aug 11, 2019 8:32:05 GMT
Yes that's a possibility; was seeking to sell several loans with short term remaining and reinvesting in newly released / loans with longer term remaining. with just a small float sitting in the MLA.
By example 3 loans looking to sell down £1K each, 3 loans looking to buy £1K of each.
If one loan sells in full, does algorithm seek to spread even across 3 loans seeking to buy, or does it fill the first and then have nothing left for the others? Also do all sells occur, before all buys? or does system step through loans seeking to match buyers and sellers?
The system steps through the loans one at a time, doing all the business it can there before moving on to the next one. And then repeats ad infinitum. The cycle can take a while, which is why patience is required before making any judgements about what is or isn't moving. One of the major benefits of this system, I think, is that it avoids much of the "Fastest Finger" phenomena that have been seen elsewhere, and makes it harder for bots to outwit humans. It does mean that if only one of your 1k sales happens, it will be random which of your three purchases completes (assuming availability in all).
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