blender
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Post by blender on Oct 30, 2019 22:52:18 GMT
So, if I sell a loan part after 2 Dec I am forced to offer the purchaser a 1.25% discount. It is not a fee, it is fixing the market in favour of the buyer to suit the needs of FC - which does not sound a legitimate practice. Particularly if you buy into am IFISA - the market value has been distorted. Perhaps requiring the attention of FCA and HMRC. And also there is a new offer of John Lewis vouchers for increasing your lending. Really desperate measures which will prove counter-productive. Just proves to me that I was right to get out - just two small loan parts left on sale. I hope you guys sell up before the discount gets to 5%.
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upland
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Post by upland on Oct 31, 2019 7:37:56 GMT
So, if I sell a loan part after 2 Dec I am forced to offer the purchaser a 1.25% discount. It is not a fee, it is fixing the market in favour of the buyer to suit the needs of FC - which does not sound a legitimate practice. Particularly if you buy into am IFISA - the market value has been distorted. Perhaps requiring the attention of FCA and HMRC. And also there is a new offer of John Lewis vouchers for increasing your lending. Really desperate measures which will prove counter-productive. Just proves to me that I was right to get out - just two small loan parts left on sale. I hope you guys sell up before the discount gets to 5%.
Its rocked me , I feel that they see us lenders as the problem. I am dubious about their integrity now. I wonder how they arrived at 1.25% , it must push some peoples positions into a loss and 5% would certainly would. The problem for me is that their returns are trending towards bad. One sells bad investments and run good ones.
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bg
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Post by bg on Oct 31, 2019 8:21:45 GMT
I really don't think they are too bothered by investors who are now trying to exit. They know they have lost them anyway.
What this appears to do is boost the returns of people who are adding new money, which will probably mean it will take them a lot longer to realise their actual returns are way under the headline rate they think they are getting. This probably means there will be less people selling in the future (not least because many will not want to pay this fee) so at least people will be able to get out quicker.
Either way I'm glad I got out when I did (save the amount I have left in late/risk band removed loans).
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corto
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Post by corto on Oct 31, 2019 8:31:20 GMT
It's not that they see the lenders as problems.
Their move satisfies two goals, luring lenders in and locking lenders in. Maybe they also want to restrict SM trading in general, but I can't see a reason for that.
There are now two incentives for new lenders: You can get returns "even better" than what FC predicts in the first place, wow!, and secondly, you still have an option to get out should you need it, an emergency exit. Newbies will not be able to assess the risks any better than a year ago and the risks have not changed. Yet the fees lock them in a bit more than before and they will not be able to appreciate it when they jump on. We see it on these pages, where some have cancelled their sell orders (or will) because of the fee. With a fee you'd only get out if you "really want to". However, if that would be for a general loss of trust in the platform in difficult times, the market would likely get stuck quickly. You would hesitate to sell if the bad signs are just starting to come up (because of the fee) and you won't be able to sell if the crisis develops. Lured in, locked in. Smart move, indeed.
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corto
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Post by corto on Oct 31, 2019 8:51:15 GMT
Why would people get out quicker?
Whether you cut a square piece of paper into strips horizontally or vertically takes the same time. It's just that with a first-in-first-out queue you wait until it's your turn, as compared to ongoing drizzles over the same amount of time in the new situation.
Not quite correct: The above ignores the fee. With the new fee, less people will sell and more may want to buy. That will reduce the available pot of money (the size of the paper square) and thereby fasten sales times. This is a reason why the fee goes from the seller to the buyer, reduced incentive for sales, increased incentive for buys.
Why 1.25% ? It has to hurt sellers, but not to a degree that they won't sell at all any more and be attractive for buyers, who may be wary of dodgy loans in preference of fresh ones. I guess .5 to 2.% is a reasonable range for optimising the conflicting requirements. Take the mean.
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r00lish67
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Post by r00lish67 on Oct 31, 2019 9:46:33 GMT
Why would people get out quicker? Whether you cut a square piece of paper into strips horizontally or vertically takes the same time. It's just that with a first-in-first-out queue you wait until it's your turn, as compared to ongoing drizzles over the same amount of time in the new situation. Not quite correct: The above ignores the fee. With the new fee, less people will sell and more may want to buy. That will reduce the available pot of money (the size of the paper square) and thereby fasten sales times. This is a reason why the fee goes from the seller to the buyer, reduced incentive for sales, increased incentive for buys. Why 1.25% ? It has to hurt sellers, but not to a degree that they won't sell at all any more and be attractive for buyers, who may be wary of dodgy loans in preference of fresh ones. I guess .5 to 2.% is a reasonable range for optimising the conflicting requirements. Take the mean. Prediction - I think we'll back at almost instant selling very quickly, because: 1) Some people are only in the queue because everyone else was, and had nothing to lose by joining it. 2) Many really hate the idea of paying to get out, and will instead try their luck with just running down their loans. 3) Once the partial sales start, some people will be happy they can get at least some money out, and then switch it off. 4) With lower loan volumes over the seasonal period and the 'bonus' being given to new investors on the old loans, FC are probably going to be more willing to switch their 'levers' for new investors to hoover up old loans. These will combine very quickly and I'd imagine in short order we'll be back at almost instant selling. I might of course be wrong!
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corto
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Post by corto on Oct 31, 2019 9:59:39 GMT
Good arguments. May well come that way.
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Post by Ace on Oct 31, 2019 10:12:26 GMT
Good arguments. May well come that way. , I usually agree with your erudite comments, and you obviously have a much deeper insight to platforms than I do, but I have to respectfully disagree with you here. I think you're very far wide of the mark here in expecting the sales to return to immediate anytime soon. I think sales will be so slow in this new round robin system that it will simply highlight how difficult it will be to get out, and that will more likely lead to even more panic. Time will tell which of us is right, and for everyone's sake I sincerely hope it's you. EDIT: oops, sorry, quoted wrong post. Shouldn't have tried doing this on a mobile phone!
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blender
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Post by blender on Oct 31, 2019 10:24:11 GMT
Buyers do not get a choice of which loan part to buy, and this 1.25 is intended to avoid the up-front loss on new accounts caused by purchasing the accrued interest on the SM - which looks bad and causes queries. Otherwise this is aimed at the sellers and trying to stop a run due to poor liquidity. The incentive for buyers is the voucher.
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sl75
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Post by sl75 on Oct 31, 2019 12:26:41 GMT
Buyers do not get a choice of which loan part to buy, and this 1.25 is intended to avoid the up-front loss on new accounts caused by purchasing the accrued interest on the SM - which looks bad and causes queries. Otherwise this is aimed at the sellers and trying to stop a run due to poor liquidity. The incentive for buyers is the voucher. At the moment, yes...
... but by Dec 2, it's possible that a third option may have been added alongside "balanced" and "conservative" which comes with an "instant" 1.25% boost to your investment as soon as your money is matched to older loan parts...
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mikeh
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Post by mikeh on Oct 31, 2019 14:47:09 GMT
OK I shall leave my £14.78 loan part on the sale queue and take the 18.475p hit like a man.  |
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rogedavi
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Post by rogedavi on Oct 31, 2019 15:12:00 GMT
what they should be doing is creating a genuine secondary market
the closest ive seen to this is ABLRate
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Post by GSV3MIaC on Oct 31, 2019 15:16:33 GMT
They used to have one, albeit only offers for sale, not buy orders. It was too transparent.
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sl75
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Post by sl75 on Oct 31, 2019 15:43:06 GMT
Ok you bunch of unisex blouses you think a 1.25% fee, or strictly speaking a 1.25% discount to asset value to exit is steep, unfair, outrageous, etc, etc... . This morning there were two sell trades on the FC IT (SCRF): one for 9 million shares the other for 12.195 million shares (my first top of the head guess is that it’s Invesco). They transacted at 82p against a NAV of 94.8p. That’s a whopping 13.5% “fee” or discount to asset value to exit a portfolio of FC loans. Wake up, put your blouses on and smell the coffee peeps. If you want out of FC loan parts and you’re offered 98.75p/£ bite the offer as quickly as it’s available and not the hand that’s facilitating it. ;-) Well, if Invesco is finally mostly out, maybe the huge selling pressure might subside there slightly, allowing the price to recover to whatever the rest of the market thinks it should be.
If they stick to the recently announced proposed timetable, any shares bought between now and 5 Nov will be due to receive both a dividend on 22 Nov (based on holdings as at 8 Nov) and also a compulsory buyback of about 5.7% of their holding (on 6 Nov, with monies credited on 29 Nov) at 94.8p/share.
Taking the dividend and buyback into account (which themselves represent the non-invested cash that forms part of the NAV), that's effectively valuing the residue ex-dividend (mostly FC loans) at less than 80p/share compared to basically the same NAV per share (but with a significant chunk of the cash assets removed from that NAV), in effect a more than 15.5% discount on the assessed value of the actual FC loans assuming the cash is valued at 100% of value.
I think that's rather undervalued - but given the size of my SCRF holding, I suppose I would say that!
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sl75
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Post by sl75 on Nov 2, 2019 20:10:00 GMT
Well, if Invesco is finally mostly out,... Invesco filed TR-1 shows their SCRF holding decreased from 9.50% to 2.05% on 31/10/2019 With further multi-million share trades at 82p reported since then, it's possible they may now be out completely. The small bounce-back in the market price also seems to suggest that...
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