stevio
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Post by stevio on Dec 4, 2015 22:18:19 GMT
Can someone explain to me how I have paid a premium, like your examples that have been given prior?
My record shows something like this:
Buy £19.25 for £17.98 on loan SEaB Energy
To me this looks like a discount?
What part of the Ablrate system has gone wrong?
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stevio
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Post by stevio on Dec 4, 2015 22:32:48 GMT
I'm sorry but I do not think that I have been dismissive at all. I have explained the situation and how it is working. All trades are very clearly marked up with how much you are paying for the relevant amount of the loan and what the AER on the transaction is. The AER is displayed both at the point of offer and before the point of execution. The amount being paid is being posted before the point of execution. This is not a situation where we are advertising one thing and then taking extra money from your account. We have considered suspending and notified people of the issue twice by email and warned them that they should trade this loan with their eyes open. I would thoroughly discourage people from acting on the basis of "it was at a discount" because this is a fundamental mistake in lending. If we had two loans that were identical apart from one being at 6% and one at 10%, buying the 6% loan "because it was being offered at 99.50 and the other one was at 100.50" is NOT a sensible lending decision. I am more than happy to look at individual cases, as I have stated before, so please do email me. We are trying to strike a balance between keeping the loan liquid and protecting lenders as we have a responsibility to everyone. A solution should be implemented soon that will make the trading a little more straightforward. You have been dismissive, you dismiss the problem as 'irritating, is not causing any major harm or loss' when it is causing loss! People are paying a premium when it is advertised at a discount, that's a loss to me! This IS a situation where you 'are advertising one thing and then taking extra money from your account' - the loans are advertised at 99%, but sold at a premium - this is a clear case of miss-selling You are comparing apples with oranges. We are not talking about two loans at different rates and with differing discounts - we are talking about one loan at one rate with one discount. You have two loans paying 10% each, one at 99% and the other at 101%, you expect the one at 99% to be at a discount and the one at 101% to be at a premium. What you don't expect is the one at 99% to actual be at a premium! The reason I started this thread was because I didn't understand your complex SM system and the fact we are at 11 pages shows that there are a whole host of other people who don't You now want to throw in discounts that are in fact a disguised premium and still insist there is no problem!!!!!!!!!!!!!!!!!!!!!
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james
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Post by james on Dec 4, 2015 22:36:11 GMT
...People, myself included, have purchased some of these loans, attracted initially by the appearance of a discount on the Secondary Market page. If you see loans offered at 99%, from anyone's point of view, you are expecting a discount. Not to be DECEIVED into paying a premium I thought the AER was just not calculating correctly, how is someone without a maths degree supposed to work out that Ablrate's system is not working correctly and actually charging a premium!!!!!!... Did you receive this email which was sent on 16 October 2015 which seems to me to have pretty clearly said that the AER is right?: " Trading of Amortising Loans on the Secondary Market (SEaB Energy and DS Leasing Loans)
We just wanted to flag up an inconsistency in the behaviour of trades on the Ablrate.com secondary market. At the moment, the cash price that you enter (ie 100.00p in the pound or 101.00p in the pound) for amortising loans is incorrectly taking into account the reducing capital between payments. This means that if you leave up a bid for a long period of time, the AER that this bid achieves falls on a daily basis by a fraction of a percent. If you leave a bid up for a couple of days, the difference is negligible. If you leave one up for more than five days though, the change can be substantial.
We are currently working on a fix to this that will ensure that AERs remain constant and hope to deploy this in the next couple of weeks once we are happy with it.
In the meantime, there is no need to suspend trading as the displayed AERs on the bid and offers and the amount being paid in the trade ticket are correct. However, we would advise people to check that they are happy before placing bids or offers for a prolonged period. Remember that once you have entered a bid or offerr, your AER is shown next to the price on the system. If you are not happy with that AER then amend your price. Therefore :
Please do not put bids or offers up for more than 48 hours on amortising loans or you risk not achieving the anticipated yield
Once you input a trade, please carefully read the AER and the amount that you are paying
Should you have any questions about the calculations then please feel free to contact us. We will notify people when the fix is in place. Once again, we would like to apologise for any inconvenience. There is no impact on interest only loans." Of course what actually matters is what you believed at the time of the deal and if you really did believe that you were actually getting a higher AER than the system was displaying you should continue the discussion with Ablrate who I assume will be content enough to cancel your trade. I doubt that the seller will object because they will presumably know that it'll just mean that they can sell and make a higher profit now than at the time of an earlier sale because profits of sales generally increase over time here. If it happens that you bought from me then provided you have a record of buying only at capital discounts and AERs above the AER at the time of purchase I hereby consent to Ablrate reversing the trade without further discussion with me about whether I'm willing. If you really did hold that belief then I hope that you do get the transaction reversed because I only want to see deals where both buyer and seller truly understand the price at the time of the trade.
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james
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Post by james on Dec 4, 2015 22:53:40 GMT
Can someone explain to me how I have paid a premium, like your examples that have been given prior? My record shows something like this: Buy £19.25 for £17.98 on loan SEaB Energy To me this looks like a discount? What part of the Ablrate system has gone wrong? Remembering that I support you getting your trades reversed if you did believe that you were getting a discount, here's my response on that post. Here's what happens if now you were to go and buy that loan on the secondary market: 1. Best offer price at the moment is shown as 98.999% with yield(AER) of 9.136% and an offer size of £1000. 2. Put £100 in the Amount to buy box and click on calculate button. 3. You get the secondary market trade summary page which says You buy £100.00 of remaining capital (of £244,106.99 originally borrowed) At a price of 99.00p for every 100p remaining Cost £99.00 Accrued interest £2.29 total cost of investment £101.29 (Yield 9.134% AER)Since that is saying that you're getting 100p for 99.00p and this is inconsistent with the 9.134% AER on an 11% loan which says there has to be a premium I hope it's clear that there is a problem somewhere there. What you chose to do when presented with an inconsistency was be very optimistic that it was a flaw in your favour rather than trying to find out what the actual situation was by doing things like asking here or contacting Ablrate, who are uniformly friendly and helpful when contacted say on the phone when placing a deal. While I support you getting a reversal if you had the mistaken belief, that's a way to proceed that is going to harm you in the future as it would do this time if Ablrate doesn't agree to reverse the trade. It's far more likely that the other people are right and you're just missing something which they understand. Never assume that you know more than the person selling, they always have a reason and if there is inconsistency you need to understand what's happening first.
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stevio
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Post by stevio on Dec 4, 2015 22:57:56 GMT
...People, myself included, have purchased some of these loans, attracted initially by the appearance of a discount on the Secondary Market page. If you see loans offered at 99%, from anyone's point of view, you are expecting a discount. Not to be DECEIVED into paying a premium I thought the AER was just not calculating correctly, how is someone without a maths degree supposed to work out that Ablrate's system is not working correctly and actually charging a premium!!!!!!... Did you receive this email which was sent on 16 October 2015 which seems to me to have pretty clearly said that the AER is right?: " Trading of Amortising Loans on the Secondary Market (SEaB Energy and DS Leasing Loans)
We just wanted to flag up an inconsistency in the behaviour of trades on the Ablrate.com secondary market. At the moment, the cash price that you enter (ie 100.00p in the pound or 101.00p in the pound) for amortising loans is incorrectly taking into account the reducing capital between payments. This means that if you leave up a bid for a long period of time, the AER that this bid achieves falls on a daily basis by a fraction of a percent. If you leave a bid up for a couple of days, the difference is negligible. If you leave one up for more than five days though, the change can be substantial.
We are currently working on a fix to this that will ensure that AERs remain constant and hope to deploy this in the next couple of weeks once we are happy with it.
In the meantime, there is no need to suspend trading as the displayed AERs on the bid and offers and the amount being paid in the trade ticket are correct. However, we would advise people to check that they are happy before placing bids or offers for a prolonged period. Remember that once you have entered a bid or offerr, your AER is shown next to the price on the system. If you are not happy with that AER then amend your price. Therefore :
Please do not put bids or offers up for more than 48 hours on amortising loans or you risk not achieving the anticipated yield
Once you input a trade, please carefully read the AER and the amount that you are paying
Should you have any questions about the calculations then please feel free to contact us. We will notify people when the fix is in place. Once again, we would like to apologise for any inconvenience. There is no impact on interest only loans." Of course what actually matters is what you believed at the time of the deal and if you really did believe that you were actually getting a higher AER than the system was displaying and a capital discount even though the price was higher than the value remaining you should continue the discussion with Ablrate who I assume will be content enough to cancel your trade. I doubt that the seller will object because they will presumably know that it'll just mean that they can sell and make a higher profit now than at the time of an earlier sale because profits of sales generally increase over time here. If it happens that you bought from me then provided you have a record of buying only at capital discounts and AERs above the AER at the time of purchase I hereby consent to Ablrate reversing the trade without further discussion with me about whether I'm willing. While I don't see how you could have believed you were getting a discount when capital price and AER were both telling you that you could only be paying a premium, if you really did hold that belief then I hope that you do get the transaction reversed because I only want to see deals where both buyer and seller truly understand the price at the time of the trade. Thanks James I did receive this, but thought it was mainly about leaving bids up for a long time, as it doesn't mention placing bids till fifth paragraph. Again, just like everything Ablrate, it is over complicated. It also highlights that this problem has been happening for nearly 2 months now with no fix. I don't believe capital price was telling me I was paying a premium. Buy £19.25 for £17.98 on loan SEaB Energy appears to be a discount. Yes AER was lower than expected, but I thought this was an error, particularly when TWO other factors, the price I was paying for X amount and the 99% discount, both showed a discount. I feel disappointed to be honest, as I was actually trying to diversify on a platform I had quite liked as it had a SM and I had spent some time trying to understand it. Now realizing that it is just too over complicated and even spending quite some time on trying to understand it, it is just too easy to make a mistake. I will be taking my money elsewhere.
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stevio
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Post by stevio on Dec 4, 2015 23:15:40 GMT
Can someone explain to me how I have paid a premium, like your examples that have been given prior? My record shows something like this: Buy £19.25 for £17.98 on loan SEaB Energy To me this looks like a discount? What part of the Ablrate system has gone wrong? Remembering that I support you getting your trades reversed if you did believe that you were getting a discount, here's my response on that post. Here's what happens if now you were to go and buy that loan on the secondary market: 1. Best offer price at the moment is shown as 98.999% with yield(AER) of 9.136% and an offer size of £1000. 2. Put £100 in the Amount to buy box and click on calculate button. 3. You get the secondary market trade summary page which says You buy £100.00 of remaining capital (of £244,106.99 originally borrowed) At a price of 99.00p for every 100p remaining Cost £99.00 Accrued interest £2.29 total cost of investment £101.29 (Yield 9.134% AER)Since that is saying that you're getting 100p for 99.00p and this is inconsistent with the 9.134% AER on an 11% loan which says there has to be a premium I hope it's clear that there is a problem somewhere there. What you chose to do when presented with an inconsistency was be very optimistic that it was a flaw in your favour rather than trying to find out what the actual situation was by doing things like asking here or contacting Ablrate, who are uniformly friendly and helpful when contacted say on the phone when placing a deal. While I support you getting a reversal if you had the mistaken belief, that's a way to proceed that is going to harm you in the future as it would do this time if Ablrate doesn't agree to reverse the trade. It's far more likely that the other people are right and you're just missing something which they understand. Never assume that you know more than the person selling, they always have a reason and if there is inconsistency you need to understand what's happening first. Thanks, I don't think I am am the only one who thought this was an error - there are several people a few posts back questioning why the AER has not been corrected or displaying correctly I am no mathematician, so I would be grateful if someone could explain how "100p for 99.00p with the 9.134% AER on an 11% loan" is correct - even you describe this as 'inconsistent'. If its not correct, then it should have been fixed. If not, then sales should at least be able to be reversed as the sale was misrepresented.
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ablender
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Post by ablender on Dec 4, 2015 23:53:35 GMT
I have been following along the discussion since I posted my initial request. Sorry I did not intend to cause such an outburst, but all in all it does show how frustrating all this can be. I do wish that the SM is simplified. Please do keep in mind that p2p is not only meant for people who's profession relates to finance but to anyone who would like to invest some money like myself. For me if someone tells me I am going to discount something by 2%, or you are paying 98% of the price, I will understand it. Talking about yields and AER - - I am completely lost.
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james
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Post by james on Dec 5, 2015 2:01:22 GMT
For me if someone tells me I am going to discount something by 2%, or you are paying 98% of the price, I will understand it. Talking about yields and AER - - I am completely lost. Yield is just the effective interest rate you're getting, just as if it was in a savings account paying that much as its AER. It's the most important number. Discount or premium doesn't matter so much unless you're selling, when it tells you how much of your longer term return you're going to be giving up to sell and how much of it the buyer is going to get.
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james
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Post by james on Dec 5, 2015 7:31:24 GMT
I am no mathematician, so I would be grateful if someone could explain how "100p for 99.00p with the 9.134% AER on an 11% loan" is correct - even you describe this as 'inconsistent'. If its not correct, then it should have been fixed. If not, then sales should at least be able to be reversed as the sale was misrepresented. It isn't correct and it is impossible for it to ever be correct for a loan with an 11% raw interest rate. Buying at a discount means that the AER needs to be above the raw 11% loan interest rate and if it isn't it means that the price, AER or both are wrong and you shouldn't trade until you understand which is right and why. Something less than GCSE maths is needed to know that - the part where interest rates were covered. But that's a long time ago for some people and not everyone would get it anyway. Buying at a premium doesn't always mean that the AER has to be below the raw loan rate because that 11% isn't compounded while the AER is. So the AER for a raw loan rate of 11% is actually higher than 11% so this means that for a smallish premium the AER can still be 11% or higher, but not for a big premium. While you really can ask for the deal to be reversed what you probably should do instead is look at the AER that you got at the time of your deal and compare that to what you can get on the secondary market. If you can sell for a lower AER than you paid, you'll have made a profit on the deal. That beats just reversing it and handing the extra profit to the person you bought off when they sell, if they even want to now. Andy is at a big disadvantage here because he worked for so long in bond trading so all of this interest rate stuff is just obvious to him, though amortising loans probably aren't quite as obvious because most bonds aren't amortising. On the other hand, for me, it's obvious that there's enough inconsistency that if this was to end up with the Financial Ombudsman Service, Ablrate would be told to reverse or do something else with the same effect. So doesn't make sense for them to just not get on with doing it if someone did get it wrong. The sellers are likely to end up better off so no real reason mostly for them to be unhappy unless they made some other changes in what they did based on the money they received, which Ablrate can deal with using a free loan until they sell the money or buying it off them (or you, for that matter). Yet I think - and hope! - that most buyers were looking at the AER and won't be unhappy, so it's best just to leave trading open and perhaps follow up with an email and offer to reverse to all buyers just in case they didn't understand that they weren't really getting a discount. Of course, fixing it beats this, but it's worth remembering that buyers of the original loan or on the secondary market were expecting resale to be available and it harms them to stop it. So it's a case of balancing possible harms until the fix is in place. So my advice to you: just go and sell for a profit. And to Ablrate: let you know that they will reverse if you really want to but it's probably not your best deal. Reversing isn't really the best deal for anyone involved. Not you, not the seller and not Ablrate. It's just an option you can seek if you want to. So if you can I suggest that you make money out of it even if it isn't the way you were originally thinking you would. Nothing wrong with a profitable double-take!
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Post by oldnick on Dec 5, 2015 8:29:43 GMT
Generous portions of rational comment james. Thank you.
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Post by manxfinch on Dec 5, 2015 10:16:45 GMT
Having waded through this thread I now realise why the SM's on "at par only" sites such as SS (and now MT) are so hugely liquid whereas the more "complex" market-making SM's are not!
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SteveT
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Post by SteveT on Dec 5, 2015 10:23:08 GMT
Having waded through this thread I now realise why the SM's on "at par only" sites such as SS (and now MT) are so hugely liquid whereas the more "complex" market-making SM's are not! Although, to be fair, if you listed your parts at Par on Ablrate's SM then they would sell in no time! (at least for all the non-amortising loans)
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Post by manxfinch on Dec 5, 2015 10:51:16 GMT
Stevet - good point. What I suppose I was trying to say is that if a site (AR or any other) is trying to drive the uptake of its SM (especially with newcomers) then over-complexity will be counterproductive. (As an aside, I also belong to 2 sites that trumpet themselves as being for "sophisticated investors" and on one the SM barely functions because it is horribly complicated and on the other it is fairly stagnant). As another aside, those sites that take ages to fix known 'glitches' in their SM's let themselves down. As we have seen in the last few days on another platform it is possible to launch an SM on time that appears to be fit for purpose ... so my question to AR would be why can't known glitches on the SM just be sorted?
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SteveT
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Post by SteveT on Dec 5, 2015 11:06:29 GMT
Stevet - good point. What I suppose I was trying to say is that if a site (AR or any other) is trying to drive the uptake of its SM (especially with newcomers) then over-complexity will be counterproductive. (As an aside, I also belong to 2 sites that trumpet themselves as being for "sophisticated investors" and on one the SM barely functions because it is horribly complicated and on the other it is fairly stagnant). As another aside, those sites that take ages to fix known 'glitches' in their SM's let themselves down. As we have seen in the last few days on another platform it is possible to launch an SM on time that appears to be fit for purpose ... so my question to AR would be why can't known glitches on the SM just be sorted? From ablrateandy's other comments, I think he's been asking similar questions of the web developers for some months (although not so politely)
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Post by ablrate on Dec 5, 2015 12:54:31 GMT
Hi
I won't go over this too much, just to say that we work incredibly hard (non more so than Andy) to provide a service that works for investors and provides alternatives to the 'par-only' platforms on the SM. The developers have let us down on this particular issue, but we had a meeting on Thursday with them to fix it, we are also bringing internal development on board also to make sure that ongoing development is quicker. Stevio, please DM me your details and I will discuss this with Andy on Monday about your trades and will have a look at any other trades that may have been affected and take appropriate action.
We should have this fixed shortly and will update you as we progress, if we have to pause the amortising loans we will.
Regards Ablrate
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