Greenwood2
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Post by Greenwood2 on Apr 6, 2022 10:05:27 GMT
I wonder if everyone currently buying loans on the SM know or understand that they will be stuck with them?
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Post by overthehill on Apr 6, 2022 10:05:38 GMT
That's how I read it. I wondered if they have until Friday too? I used to find the ABL SM fairly incomprehensible, one reason why I stopped lending there, I don't know how it operates now. It may be the buying and selling at premium/discount that the FCA don't like? Or the potential cross platforms buying and selling?
Or the fact a loan from a borrower can be paused while other connected loans are tradeable !
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eeyore
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Post by eeyore on Apr 6, 2022 13:30:34 GMT
I've just read today's email about the closure of the Loan Exchange on Friday, but still can't understand why Ablrate are having to close it.
"- We will not be able to switch loans from your IFISA to your standard account due the HMRC rules on where they must be moved through an 'open market'"
This bullet point from the email made me wonder if FCA consider that ABL's Loan Exchange has enabled lenders to sell-and-rebuy loans in their ISA accounts by manipulating the repurchase price to gain a financial advantage from the tax benefits of the ISA account. In other words, FCA didn't regard the ASMX as a true 'open market'.
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Post by Badly Drawn Stickman on Apr 6, 2022 14:25:18 GMT
I've just read today's email about the closure of the Loan Exchange on Friday, but still can't understand why Ablrate are having to close it. " - We will not be able to switch loans from your IFISA to your standard account due the HMRC rules on where they must be moved through an 'open market'" This bullet point from the email made me wonder if FCA consider that ABL's Loan Exchange has enabled lenders to sell-and-rebuy loans in their ISA accounts by manipulating the repurchase price to gain a financial advantage from the tax benefits of the ISA account. In other words, FCA didn't regard the ASMX as a true 'open market'. I think todays email was more giving the functional process that will happen (I would be worried if people had not worked that out already) than adding anything to unravelling the mystery. I think in that context the ISA issue is effect rather than cause. Obviously telling us what the FCA is opposed to would be the simple action but I guess does not form part of ablrates master plan. Indeed I am far from convinced that the platforms use of ASMX is the genuine reason why it is being temporarily closed there is no logic to that. Sliding seamlessly into conspiracy mode I wonder if they are not objecting (like myself obviously) to the 'liquidity providers' who are effectively setting market rate most of the time. It is eminently possible they are paying fees for the pick pocketing rights. I wonder if that would reach the FCA as feedback were I to offer it?
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dh1
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Post by dh1 on Apr 6, 2022 19:57:14 GMT
Just a couple of points. It is important to distinguish between "cash" held in an IFISA and "loans" held there. Cash has always been removeable as the IFISA is flexible; loans never have on Ablrate or in fact on several other platforms.
Todays email was much better written than the previous one and covered the points most lenders will be concerned about.
Perhaps inevitably - as mentioned by others - the fundamental reason(s) for stopping the secondary market - which is normally crucial to a successful p2p platform - go unsaid, in simple terms at least. Without slipping into conspiracies, there has been mention of the dreaded (looking like) "mini-bonds" being relevant which I happen to think is probably pivotal here. At least for the FCA...
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eeyore
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Post by eeyore on Apr 7, 2022 8:52:42 GMT
.....
Perhaps inevitably - as mentioned by others - the fundamental reason(s) for stopping the secondary market - which is normally crucial to a successful p2p platform - go unsaid, in simple terms at least. Without slipping into conspiracies, there has been mention of the dreaded (looking like) "mini-bonds" being relevant which I happen to think is probably pivotal here. At least for the FCA...
Looking back at ABL recent history, then the trigger for the FCA was (probably) that loan offering bonds as security last September : 1000169 p2pindependentforum.com/thread/18953/1000169-abl
And from a post therein, it appears that Balder has an accurate crystal ball when making the comment about the loan: " Agree 100% I'm surprised the FCA allow this type of investment in P2P. Ablrate did you seek advice from the FCA on this?"
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davidkent
I think. Therefore I am.
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Post by davidkent on Apr 7, 2022 10:24:22 GMT
I too received the two emails. Sorry to sound dim, but I am new to this.
What does this mean to investors - in simple terms - please? E.g., are we going to lose our money?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 7, 2022 10:37:01 GMT
I too received the two emails. Sorry to sound dim, but I am new to this.
What does this mean to investors - in simple terms - please? E.g., are we going to lose our money?
In simple terms, you wont be able to exit loans early, you will have to hold until repaid. You wont lose any money specifically as result of this change, it will still be invested in the loans. Everything else will carry on as normal ... repayments will be made, youll still be able to invest in any new loans, access your account, make withdrawals/deposits. Whether you will lose you money isnt affected by the SM but whether the borrowers repay or default. What it does mean is if you decide you dont like a loan because it is late paying, or gets into difficult and is restructured, there wont have an ability to exit the loan by selling on the SM, even at a discount. Nor will there be the opportunity to diversify or rebalance a portfolio by buying into previous loans. Inevitably, for some that makes the platform more risky.
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nick
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Post by nick on Apr 7, 2022 10:37:51 GMT
I too received the two emails. Sorry to sound dim, but I am new to this.
What does this mean to investors - in simple terms - please? E.g., are we going to lose our money?
In simple terms it means that there will be no secondary market and therefore we will be unable to sell loans before their maturity date. It also means there is no way to transfer loans held in a normal account to an ISA account as this could be previously done by selling a loan from one account and buying with the other via the secondary market. It should have no impact on the loans themselves nor their risk of default - ie it shouldn't affect repayments of capital or interest on loans held.
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Post by overthehill on Apr 7, 2022 10:47:57 GMT
When it rains it pours. Between them they need to sort it out and re-install some kind of secondary market as investors bought into every loan knowing that they had the ability to sell them before maturity if they were performing.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 7, 2022 11:53:46 GMT
When it rains it pours. Between them they need to sort it out and re-install some kind of secondary market as investors bought into every loan knowing that they had the ability to sell them before maturity if they were performing.
Indeed, changes the proposition somewhat. Im sure Ablrate are gearing themselves up for a wave of complaints, This is of potential interest www.financial-ombudsman.org.uk/decision/DRN-2535652.pdf
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davidkent
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Post by davidkent on Apr 7, 2022 12:17:47 GMT
Many thanks to those who kindly answered my question. Much appreciated. David,
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Post by Badly Drawn Stickman on Apr 7, 2022 12:31:06 GMT
When it rains it pours. Between them they need to sort it out and re-install some kind of secondary market as investors bought into every loan knowing that they had the ability to sell them before maturity if they were performing.
Indeed, changes the proposition somewhat. Im sure Ablrate are gearing themselves up for a wave of complaints, This is of potential interest www.financial-ombudsman.org.uk/decision/DRN-2535652.pdfAn interesting read, with a surprising twist in the tail. For a while there I though he had pulled it off....
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nick
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Post by nick on Apr 7, 2022 13:11:35 GMT
When it rains it pours. Between them they need to sort it out and re-install some kind of secondary market as investors bought into every loan knowing that they had the ability to sell them before maturity if they were performing.
We are able to help the cause by providing ABL our opinions which they will feedback to the FCA. I've already provided by feedback to ABL which I hope they will share with the FCA. This is a summary of my feedback: The Loan Exchange provided significant benefit to me in respect of managing and reducing my credit exposures to loan on the platform by: -Providing me the potential opportunity to reduce my loan holdings in light of my changing view of external credit conditions. Eg when covid hit, I thought the wider UK economy would significantly and defaults would rise. The Loan Exchange allowed me to reduce my loan holdings (be it at a discount) and reduce my exposures reflecting my view of heightened risk. As it turns out, I was wrong, but I don't regret selling down my loans and crystallizing a loss as I viewed it as small price to pay to sleep better at night. -Allowing me to reduce concentration risks by making it easier and quicker to diversify my portfolio across a greater number of lenders and than would otherwise be the case. -Providing liquidity, understanding that bids may not always exist and/or loan may get suspended due to credit events with specific loans. Closing the Loan Exchange has greatly increased the illiquidity risk of my remaining portfolio. Whilst I can understand the FCA's concern about the possibility of loans being traded with incomplete credit information, this risk should be balanced against the benefits that a secondary market provides and decision made after consideration of all these factors rather than a narrow concern. I conclude from my own use of the Loan Exchange that the benefits as outlined above far outweigh the risks and I view that the overall risk associated with my loan portfolio will increase significantly as a result of the Loan Exchange closing. If others share a similar view, I suggest that they made these known to ABL and press them to feed this back to the FCA.
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blender
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Post by blender on Apr 7, 2022 19:05:10 GMT
I'm sure that Ablrate will recall that they posted messages about ASMX saying that liquidity was key to the future of P2P. I'm sure that they remember how we mostly agreed strongly at the time though we were happy with the SM and did not look forward to a 0.5% charge per trade, split between the parties, on ASMX. It's all in the ASMX thread. Unfortunately that means that attacking ASMX is attacking p2p though liquidity. ASMX is an easy target, as a third party site. The way to demonstrate commitment to liquidity is to restore the SM, please. I am looking forward to being able to use it again.
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