Website Update

Quick update has just been set live for the horseshoe graph.  Between 95 and 100% a decimal place will now be shown (e.g. 97.4%).  It will also hold at 99.9% until it is actually 100% full, even if it would normally round to 100%.

Another new facility was released to the site admin team yesterday that is likely to be used on one or two of the loans in the coming days.  We can now revert a loan that hasn't been paid out back to the preview stage, with all existing bids converted back into pre-bids.  This will allow lenders to repurpose their funds, cancel their pre-bid (should they wish), or leave everything as is for when the auction starts again.  Bid order (and therefore priority) is preserved and any existing pre-bids that had failed to convert into bids are recreated at the end of the list, again preserving their order.

Hopefully we won't need to use this facility too often but it's intended to be used where the loan is taking too long to pay out or where new information comes to light during the drawdown process where we think lenders should be given a say in whether or not they want to retain their bids.  By reverting to pre-bids we can effectively give lenders a vote on keeping or removing their bids.

Another small update has just been released ready for tomorrows loans.  When prebids are converted into real bids at the start of an auction for those members who have access to the shadow bidding facility if they have insufficient funds to cover the bid but have sufficient balance on their shadow bid account then shadow bids will be placed rather than normal bids.

Hopefully that will make sense to those affected.  For all others this doesn't affect pre-bids for you.

chris the function does not seem to be fully functioning as the horseshoe is not updating. I have just deleted prebids for L2L7 and the Brummie Bridge but the horseshoe has not updated accordingly.

Update: Things have updated now but then numbers don't appear to match (unless people are prebidding), plus how are these changes of status going to be reflected in the statement?

I was updating whilst you replied, the horseshoe has updated. However there is no reflection of the movement of the monies in the statement. There is a debit for the bids but not a credit to reflect the change from a bid to a pre-bid. 

I've just been asked a question about reversal transactions for bids and I think everyone would benefit from a brief description of how the system works.

When a bid is placed there isn't actually any movement of money, the money for the bid is still in your account it is just reserved.  This works in exactly the same way as a pre-authorisation on a debit card.  For example if you make a purchase online for an item many of the larger merchants will place a pre-authorisation on your card reserving the funds, then they'll ship the goods, then they'll confirm the card transaction.  More info can be found here.

In the same way when a bid is placed a pre-authorisation is used to reserve funds in your account but the funds remain there.  When the auction pays out all those bids are then processed so that the funds are taken and moved into the borrowers account.  It's at this point that there is an actual movement of money.  If your bid is rejected in the case of an auction failing or if you are out bid in a reverse auction then the pre-authorisation is removed.  This also means that if your bid amount is adjusted, such as you being partially out bid in a reverse auction, then we can simply adjust the amount of the pre-authorisation.

There are many reasons for this approach including: this greatly simplifies the code and makes it much harder for the system to lose track of the amounts invested; for large investors such as our underwriters who are going to be frequently out-bid their statement would become an unholy mess with thousands of line items per auction (if not more); reverse auctions would create a similar issue for all our lenders which would become a real issue as the site grows; money isn't credited to the borrower until the loan is drawn down removing the need for interim accounts and other hacks to stop the borrower from being able to withdraw funds early (albeit we don't have a public interface for this yet); this solution is slightly easier to scale from a performance perspective.

This is also the same structure used by FC, at least during their first couple of years of operation.  So at the time we were building our platform it was a known and proven approach to the problem.

Now I do agree that our system isn't as clear as it should be with our mistake being including bids on the statements in the first place.  Just as banks do not show pre-authorisations on their statements I believe that we shouldn't be showing them on ours.  Our statements should be sorted by the settled date of transactions, rather than the created date, and should only show settled transactions.  Pre-authorisations should be shown separately giving lenders insight into their account, but as there was no actual movement of money I don't believe they should appear on the statement.

This would be a relatively straight forward change for us to make and would allow us to lock the statements down, so they cannot change once a transaction is published on them.  To change the way the system works in order to record bids as a movement of money would be a very fundamental change to the platform entailing weeks if not months of work and testing and would involve trying to import all the existing transactions into the new way of doing things.  Unless there are very clear and definitive benefits of that approach then I will personally be pushing in the other direction.

Since it was first raised in the middle of last year by one of our largest lenders this has all been a matter of much internal debate but no definitive action has been decided upon.  This is still a matter of debate amongst the directors, so whilst I welcome feedback from all lenders and will pass it on to my fellow directors it's unlikely to end up instigating rapid change.

Can I suggest that funds are first sourced as shadow bids from the shadow bid account, if this exists, and then the remainder sourced as normal bids from the funds in 'My Account'.  The reason for this is that it is simple for the lender to settle shadow bids into normal bids, but not possible to convert normal bids into shadow bids.