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Post by chris on Dec 10, 2013 9:30:42 GMT
Shadow bids are only open to selected users that the site admins trust to pay when called upon. If you've been given access to the system then you can place a shadow bid at any time up to your credit limit. Those bids need to be settled before the loan can be drawn down but from a technical point of view can be settled at any point up to that time. When you get chased to settle is up to the admin team, they have a screen showing them all the unsettled shadow bids and they'll manually choose who to chase and when. I expect that if this system is getting used more widely than it has been to date then we'll add some automated chasing in to the mix.
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oldgrumpy
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Post by oldgrumpy on Dec 10, 2013 9:43:20 GMT
Thank you Chris. Very interesting. I feel honoured! No doubt users of the facility will be informed when drawdown is imminent (say a week before) to make sure everything runs smoothly, and abusers will soon have their privilege removed.
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Post by chris on Dec 10, 2013 10:08:58 GMT
I would imagine that you'll start getting chased once the auction completes and that the intensity will increase as the loan approaches drawdown. And abusers will immediately have their privileges removed.
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Post by stevegrice on Dec 10, 2013 10:55:42 GMT
They are an active sponsor of loans to Thin Cats. So its kind of intriguing as to why they took this one to Assetz rather than TC. Not the first that they have taken to Assetz. K+ is also theirs. The worry is Assetz might be getting the rejects, but I think Ludgate are too professional and careful of their reputation for that. It would indeed be interesting to know. Thankyou Pikestaff for the vote of confidence. We do pride ourselves on our reputation. Whilst we are a sponsor of Thincats, we look to the whole market for our clients, so we can and do use other platforms and institutions. in this particular case, the 10year amortisation but a 5year agreement does not sit well with Thincats software at the moment. This made Assetz the natural place for it. The wider point is that, as good business sense, I do not want to place all my products with Tesco when other buyers are available. That's just about spreading our risk. Regards Steve - Ludgate Finance
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Post by andrewholgate on Dec 10, 2013 11:41:28 GMT
I'd also add I don't accept rejects. Steve will confirm we have declined some deals that we just can not get comfortable with.
In a free market, the seller has a choice of who to sell to. Spreading the risk is something we all do.
Andrew
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Post by bracknellboy on Dec 10, 2013 12:14:36 GMT
in this particular case, the 10year amortisation but a 5year agreement does not sit well with Thincats software at the moment. This made Assetz the natural place for it. The wider point is that, as good business sense, I do not want to place all my products with Tesco when other buyers are available. That's just about spreading our risk. Second point fully understood, wouldn't expect anything else. The first point is an interesting one.
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Post by chris on Dec 10, 2013 13:48:27 GMT
Second point fully understood, wouldn't expect anything else. The first point is an interesting one. I can't speak for all the platforms but most of them appear to only support straight forward loans with money borrowed for a certain term at a certain rate. We've invested a lot of time and effort in producing a much more flexible loan model that allows for interest free periods, payment free periods, different amortisation periods, etc. This was essential for many of the property loans we've been looking at but equally gives the SME lending team much more flexibility in the way loans are packaged for our borrowers and brokers. If you can't tell I'm quite proud of this part of the system, and I'm really looking forward to some of the upgrades we have planned for next year to offer further power and flexibility.
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Post by jevans4949 on Dec 10, 2013 15:13:50 GMT
chris: Interesting point about your flexibility, and undoubtedly a plus. I note that a number of loans (including this one) are such that logically they will require re-financing at the end of the term. Has Assetz considered offering loans longer than 5 years? Is there a legal barrier, or would it just be acceptability to the lenders or the borrower? I guess you might have to offer lenders free access to the aftermarket after 5 years, plus the ability to sell units at other than the nominal value, to allow for variations in interest rates? I guess Assetz would in any case offer to re-finance, presuming the borrower had behaved themselves, and their prospects looked as good as before?
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Post by chris on Dec 10, 2013 15:20:08 GMT
There's no technical limit on the loans so the 5 year maximum of current loans has been driven by the underwriting team and the information they have of what our lenders are after. If the team wanted to do a 50 year loan the system wouldn't stop them. I'm sure andrewholgate can give some more insight. As the P2P market matures I would expect to see much greater variety of loans including in the term. Technically we're ready for that, although there are some changes I want to make to offer more flexibility to the structure of loans within their term and for handling refinancing more gracefully, we just need to grow our lender base and sources of loans in order to be able to offer that variety. |
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mikes1531
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Post by mikes1531 on Dec 10, 2013 16:07:16 GMT
It could mean that no one will put in a large bid two weeks earlier than necessary, adding that time to a possible four weeks (or more) to drawdown with 0% interest. I wonder if it is allowed to shadow bid then pay two weeks later? I'm not at all certain of the rules for shadow bids.
If you thought that the loan opportunity was attractive and was going to be completely funded by others, then you would have to put your bid in while it was still available, and that could mean well before the nominal two week bidding period was over. At what point you place your bid depends on how disappointed you'd be if you missed out on the opportunity. The people keen to invest in this loan have bid already. Bids will now trickle in slowly for a while. If the loan gets to the point of being 80+% funded, those trying to avoid idle money will be forced to act, and the loan will become fully funded. If 80% isn't reached as the end of the offering period, then bidding will slow to a crawl unless an underwriter is brought in. Having said that, though, bringing in an underwriter hasn't exactly made a lot of difference to the Redditch loan that's been stuck at about 50% funded for about a week. Either bids will flood in at the last minute or the underwriter will be left carrying a large chunk of that loan for a while before they can start unloading it. If by shadow bids you are referring to underwriters, AIUI the common practice is that those people don't actually have to provide their money until drawdown. OOPS! My apologies. I seem to have responded to a posting at the bottom of Page 3 without seeing that it had been answered by a posting on Page 4. Sorry 'bout that!
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Post by chris on Dec 10, 2013 16:17:17 GMT
Shadow bidding was the facility created to allow underwriters to place their bids without having to put cash into the system. That facility has since been expanded a little to allow a select group of trusted lenders to place normal non-underwriting bids without having to have cleared funds in their account at the time of bidding. They can then settle those bids further down the line, before the loan is drawn down, enabling them to bid without tying up their funds earning 0% interest. As soon as they know the loan is going ahead they can free up funds from other investments and transfer them into the platform.
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oldgrumpy
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Post by oldgrumpy on Dec 10, 2013 16:30:53 GMT
That is a very big "plus" as far as I am concerned. Even with a fairly modest limit such as I have been allowed, I need not be concerned if drawdown is slow. From now on I will aim to pay my dues fairly late (e.g when Assetz send the message that drawdown is expected "soon") and will definitely not abuse the privilege. It's too valuable.  |
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Post by chris on Dec 10, 2013 16:54:37 GMT
It's definitely a big plus. I'd be interested to explore whether this kind of unfunded bid could be safely expanded without distorting the market due to people never settling up, or placing too much risk on Assetz for the same reason leading to unfunded loans. Perhaps a scheme where people could place unfunded bids that counted towards the total but behaved like underwriting bids in that they could be knocked out as further funding came along, encouraging people to settle up before the close of the auction. Maybe with a credit limit that was a percentage of currently committed funds to keep it in proportion to the amount you already have invested with the platform. Needs more thought...
Edit: I should add that this is me talking from a technical perspective and it would need clearance from the rest of the business first. There may also be compliance issues to overcome.
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Post by brummiefred on Dec 10, 2013 17:13:06 GMT
Would anyone care to say what size of lender one must be to be so favoured as to avoid the 0% period? Clearly not just gold club lenders!
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Post by pepperpot on Dec 10, 2013 17:48:52 GMT
Thanks for expanding on this, a 'big plus' indeed. Now I now that I won't jeopardize the privilege by waiting until closer to drawdown, I'll make more use of the feature. The last (and only) shadow bid I put in made me feel guilty until I'd cleared it but it's still sat there doing nothing at the moment. There would need to be at least a 3 day window (it's taken that long before now to see funds cleared into my assetz account, especially if a weekend is involved) to fulfill the bid. I think the risk for assetz having to stump up the funds themselves is minimal (but not non-existent) as there would be quite a good demand to place a late bid if you knew the loan was going live in the next week or so. Needs thinking through, but I'm very interested to hear the outcome of this.
Brummiefred, if your a gold club member, ask and you shall receive!
My shadow account went live on a bid I put in a request for but didn't have the available funds to cover. It was a Saturday and I made the transfer and (pre)bid on the same day. The bid went live on the Mon and I cleared it on the Tues.
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