david42
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Post by david42 on Apr 27, 2015 16:28:07 GMT
I would be delighted if GSV's regime worked but I think it might be gamed to death. Giving everyone the same marginal rate is proven to work. According to Wikipedia, the United States Department of Treasury uses this approach to raise funds for the US Government. "all bidders will pay the same amount. In theory, this feature of the Dutch auction format leads to more aggressive bidding". en.wikipedia.org/wiki/Dutch_auctionIt is Funding Circle that is using the unusual auction approach with its uneven playing field and consequential opportunities for gaming and exploiting those bidders who do not have the opportunity to bid as close to the marginal rate as others.
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Post by goldservice on Apr 27, 2015 16:35:47 GMT
Sorry - I should have explained that I only bid on A/A+ loans over £100k where loans filling at MBR are unheard of. I realise that without that knowledge my views might have appeared odd!
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registerme
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Post by registerme on Apr 27, 2015 16:38:20 GMT
Agreed. Auctions, whether Dutch (also used by Google for their IPO a few years back) or reverse, are a good way to find out what the market will bear. FC's current implementation introduces opportunities for bots and sniping that might not be present if a different approach was employed. Having said that I am not really sure what people mean by "marginal borrowing rate". I'm kind of assuming that it's the weighted mid-price at the end of an auction, I'm also kind of assuming that I am wrong  . In a perfect world wouldn't you want the highest accepted rate on auction close? |
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am
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Post by am on Apr 27, 2015 17:02:07 GMT
I interpret "marginal bid rate" as the highest accepted bid; the weighted mid-price is the weighted mean bid/borrowing rate. ("Marginal borrowing rate" might be the highest rate at which a borrower is willing to take out a loan.)
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david42
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Post by david42 on Apr 27, 2015 17:55:33 GMT
I am not really sure what people mean by "marginal borrowing rate". I'm kind of assuming that it's the weighted mid-price at the end of an auction, I'm also kind of assuming that I am wrong . In a perfect world wouldn't you want the highest accepted rate on auction close? The worked example in the Wikipedia link and the worked example by adrianc p2pindependentforum.com/post/46422/thread both work on the basis of everyone getting the highest accepted rate on auction close.
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Post by GSV3MIaC on Apr 27, 2015 19:53:00 GMT
Yep, that's what I'd mean too.
Going with 'Weighted ...' might mean someone getting a lower rate than they actually bid at (and were willing to take) .. levelling everyone UP to the highest accepted rate doesn't upset anyone (except maybe the borrower!).
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registerme
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Post by registerme on Apr 27, 2015 21:29:07 GMT
Thanks guys. I think I was getting the conversation confused, ie what some of you were proposing, with what actually happens right now, on top of not knowing what was actually meant by "MBR", "Marginal Borrowing Rate", or "Mean Borrowing Rate". Understanding what the individual words mean, the terms themselves, how they are used "officially", and how they're used in an evolving conversation is beyond my newbieness at the moment . |
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wysiati
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Post by wysiati on Apr 28, 2015 3:37:14 GMT
You ought assume he has at least 10x or 20x that much being flung around ( .. maybe a lot more), since I don't see him managing to flip what he buys (at £960 a piece) all that fast. Perhaps his surname is Cowell? It's not, but instead something rather more commonplace. On the basis of your screen name could it even be you?
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adrianc
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Post by adrianc on Apr 28, 2015 7:12:36 GMT
Sorry - I should have explained that I only bid on A/A+ loans over £100k where loans filling at MBR are unheard of. I realise that without that knowledge my views might have appeared odd! Trouble is, the bidding model has to work on all auctions. And if a significant number of bidders did say "Oh, well, I'll bid MBR on £100k+ A/A+", you'd quickly find that MBR on those loans wasn't unheard of any longer...
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min
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Post by min on Apr 28, 2015 10:08:33 GMT
Thanks guys. I think I was getting the conversation confused, ie what some of you were proposing, with what actually happens right now, on top of not knowing what was actually meant by "MBR", "Marginal Borrowing Rate", or "Mean Borrowing Rate". Understanding what the individual words mean, the terms themselves, how they are used "officially", and how they're used in an evolving conversation is beyond my newbieness at the moment . MBR stands for Minimum Bidding Rate. It's the lowest you can bid on an auction and different 'risk' categories have different MBRs. Originally Fundamentally Carefree allowed lenders to bid as low as 4% on every category. Amazingly some people did!
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Post by norfolkblue on Apr 28, 2015 11:04:25 GMT
Some interesting comments, and maybe the auctions would be feasible that way.
However, I would still oppose this and would probably lead me to avoiding Fruity Cereal, because it would take the edge away from those who wanted outperform the market, and potentially create a dangerous situations where autobidders dictate the markets, with no apparent disadvantage for them.
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Post by GSV3MIaC on Apr 28, 2015 12:29:35 GMT
You'd have to outperform the market by taking higher risks, or by picking the better loans .. instead of currently where you can outperform the market by having a smarter Bot, or by being there 24/7 (or at least at auction closes), or just by avoiding using autobuy. I mean maybe people really should be penalised for being daft/busy enough to using autobid .. it's a point of view, although not one I subscribe to.
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. In a perfect world wouldn't you want the highest accepted rate on auction close?
