locutus
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Post by locutus on Jul 31, 2015 14:02:47 GMT
Can we please have more transparency of the market. Let me give an example of how it affects both lenders and borrowers.
I have had some cash on the 3 year market for about a week or so and I had it set to match at 5.9%. This morning, I look at the queue of borrowers and see that there are very few borrowing requests and that they will get nowhere near my 5.9%. I decide to cut my losses and instead offer on the 1 month market until rates in the 3 year recover. Lo and behold, I have just checked the 3 year market and see the last match was 6.0%.
It seems that the matching is too opaque to make any serious lending decisions. It also seems that matching is performed in bulk so that there will be a build up of borrower requests (which jumps around a lot) that all match at the same time. Sometimes the build up doesn't show the true value of borrower requests like today where a lot more was matched than was originally indicated.
Is there no way to improve the efficiency of this matching so that everyone has better information with which to make better decisions?
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spiral
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Post by spiral on Jul 31, 2015 14:51:04 GMT
Can we please have more transparency of the market. I think RS are fairly transparent. They provide quite a lot of data on their site surrounding approvals, length of queues etc. Its up to you what you make of these. Unfortunately when loan applications are approved, the borrowers have (I think its 14 days) to place this on market. RS have no better idea (I suspect) of knowing when and at what rate that borrower will accept than you or I. Equally they have no foresight into the fact that I might place 100K on market to lend out at 3% tonight. Both sides of this equation will affect what rates will do today. I think the one thing that might add to the data is knowing the breakdown of loan sizes approved. Some loans are 6 figures and knowing that there is one of these waiting to come to market is likely to provide larger swings than say 10x10K loans.
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Post by contangoandcash on Jul 31, 2015 14:54:51 GMT
Can we please have more transparency of the market. Let me give an example of how it affects both lenders and borrowers. I have had some cash on the 3 year market for about a week or so and I had it set to match at 5.9%. This morning, I look at the queue of borrowers and see that there are very few borrowing requests and that they will get nowhere near my 5.9%. I decide to cut my losses and instead offer on the 1 month market until rates in the 3 year recover. Lo and behold, I have just checked the 3 year market and see the last match was 6.0%. It seems that the matching is too opaque to make any serious lending decisions. It also seems that matching is performed in bulk so that there will be a build up of borrower requests (which jumps around a lot) that all match at the same time. Sometimes the build up doesn't show the true value of borrower requests like today where a lot more was matched than was originally indicated. Is there no way to improve the efficiency of this matching so that everyone has better information with which to make better decisions? Completely agree with this, but I do doubt it is in RS' best interests - hopefully I'm wrong and they're all for giving us more data upon which we can make more efficient decisions. When trading markets I am used to seeing charts and having numerous (too many) numbers to hand. Many of which are useless, but some very simple pieces of data are useful. RS display market depth similarly to the ladders I am used to trading with, but that's where the comparison ends. It would be very useful to have charts with volumes on them, a live VWAP for the day, high matched rate and low - both during calculation hours (think this is 6am to 10pm) and 'out of hours' (I can dream). This to me would give RS much more of a tactile market feel, and more transparency than what we have now, which is effectively, punch in a number and hope for the best... meanwhile all manner of offers arrive at odd prices, just in time to strike this oddball offer or that. Perhaps I'm wide of the mark, I'm sure Kev will put me right, but it is very easy to arrive at the impression that prices matched between 6 and 10 are much lower - to keep the MR lower. (They might not be lower, but my best rates are always matched out of hours). People who previously used YR and were given best execution (at the expense of being left hanging occasionally) are now getting unnecessarily poor execution when it's not really justified, there are surely better ways to handle these. I've also always wondered how controls the borrowing offers and decides the rates they're going to ask for? Perhaps I need to dig deeper into the forum. What information are the borrowers given? Are they privy to low/high data, the current VWAP etc? Do they know the likely incoming stream of re-investments and their rates? Sorry for all the questions!
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Post by contangoandcash on Jul 31, 2015 14:56:23 GMT
Can we please have more transparency of the market. I think RS are fairly transparent. They provide quite a lot of data on their site surrounding approvals, length of queues etc. Its up to you what you make of these. Unfortunately when loan applications are approved, the borrowers have (I think its 14 days) to place this on market. RS have no better idea (I suspect) of knowing when and at what rate that borrower will accept than you or I. Equally they have no foresight into the fact that I might place 100K on market to lend out at 3% tonight. Both sides of this equation will affect what rates will do today. I think the one thing that might add to the data is knowing the breakdown of loan sizes approved. Some loans are 6 figures and knowing that there is one of these waiting to come to market is likely to provide larger swings than say 10x10K loans. Just as I post, spiral chimes in with most of the answers, thanks !
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locutus
Member of DD Central
Posts: 1,059
Likes: 1,622
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Post by locutus on Jul 31, 2015 15:10:40 GMT
Can we please have more transparency of the market. I think RS are fairly transparent. They provide quite a lot of data on their site surrounding approvals, length of queues etc. Its up to you what you make of these. Unfortunately when loan applications are approved, the borrowers have (I think its 14 days) to place this on market. RS have no better idea (I suspect) of knowing when and at what rate that borrower will accept than you or I. Equally they have no foresight into the fact that I might place 100K on market to lend out at 3% tonight. Both sides of this equation will affect what rates will do today. I think the one thing that might add to the data is knowing the breakdown of loan sizes approved. Some loans are 6 figures and knowing that there is one of these waiting to come to market is likely to provide larger swings than say 10x10K loans. None of this explains what I have observed. Why is matching done in bulk? If it was down to individual borrowers and lenders, the figures displayed would be much more fluid.
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Post by contangoandcash on Jul 31, 2015 16:08:16 GMT
Could the bulk matching be down to all of the MR offers being posted at the same time ? Or is it something different ?
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