ablender
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Post by ablender on Oct 20, 2015 10:47:39 GMT
Currently it has reached below -£12000. How does this work. How are people investing more when there is no availability? Will they get paid any interest on the extra investments that puts the total in the negative?
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webwiz
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Post by webwiz on Oct 20, 2015 12:03:20 GMT
Now down to a more normal -£2k+. Maybe SS staff were making some sort of £10k adjustment. Did you notice which loan was most over-funded?
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ablender
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Post by ablender on Oct 20, 2015 13:02:12 GMT
No, I was spooked and just moved on.
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adrianc
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Post by adrianc on Oct 20, 2015 13:21:40 GMT
Currently it has reached below -£12000. How does this work. How are people investing more when there is no availability? Will they get paid any interest on the extra investments that puts the total in the negative? Let's say for the sake of simplicity that the whole of the secondary market is perfectly balanced, no parts available in anything. Everything at £0. Then somebody puts £12k of a loan up for sale. Somebody sees it, clicks on the loan, and get the loan page up in their browser, showing £12k available. Before they click to buy it, though, somebody else sees it, and gets the loan page up, still showing £12k available. Both of them decide to buy the full £12k. This is where it gets unusual... SS doesn't attempt to figure out who was first, and say to the second "Oops, sorry, somebody beat you to it". Instead, they "sell" £12k to each of the buyers, who then see £12k in their account and get interest on the full £12k. The loan page now shows a negative availability of £12k for that loan. So how to get out of the negative? From here on is where it gets a bit theoretical and flaky... When somebody else puts £2k up in that loan, it's "bought" instantly, and the loan is £10k negative. If somebody else then puts £12k up, the loan has £2k available. In practice, AIUI, that doesn't always quite work right. The total available funding figure is just a total of what's available - or over-sold - in all the live loans. So it might just be that a dozen loans are £1k over-sold. Or two dozen are £1k over-sold each, but another dozen have a grand each available.
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ablender
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Post by ablender on Oct 20, 2015 14:12:54 GMT
So, let us say that I have £100 on loan X which currently has no availability.
I put the £100 for sale.
I open 5 tabs all showing that there is £100 for sale.
I then buy 5 £100 parts and put that loan in a state of -£400.
I will start earning interest on £500 instead of £100.
This is what I understood up till now.
Isn't that at the detriment of SS?
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sam i am
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Post by sam i am on Oct 20, 2015 14:29:41 GMT
So, let us say that I have £100 on loan X which currently has no availability. I put the £100 for sale. I open 5 tabs all showing that there is £100 for sale. I then buy 5 £100 parts and put that loan in a state of -£400. I will start earning interest on £500 instead of £100. This is what I understood up till now. Isn't that at the detriment of SS? You will of course have to fund a BACS deficit for £500, so you still have to deposit the necessary capital. And if the negative availability doesn't get removed by other sales, it is possible that SS will re-balance things. This happened when I inadvertently bought a loan part twice. The website was really slow and I thought it hadn't responded so I clicked the buy button again and my transaction went through twice. In this case (after several days) the negative availability had persisted. SS then cancelled one part of the loan. It was as if it had never existed. I got my money back but the accrued interest on the cancelled part had gone.
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adrianc
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Post by adrianc on Oct 20, 2015 14:31:30 GMT
So, let us say that I have £100 on loan X which currently has no availability. I put the £100 for sale. I open 5 tabs all showing that there is £100 for sale. I then buy 5 £100 parts and put that loan in a state of -£400. I will start earning interest on £500 instead of £100. This is what I understood up till now. Isn't that at the detriment of SS? And you will, of course, need to find £400 to balance your account. Don't forget that, at the moment, we lend to SS. SS lend to the business. Whether the -ve will sort itself out when the trust model starts to come in, and we're lending direct to the businesses, we'll wait and see. It may well be that SS see it as their in-house underwriters covering the position.
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star dust
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Post by star dust on Oct 20, 2015 14:44:30 GMT
Whether the -ve will sort itself out when the trust model starts to come in, and we're lending direct to the businesses, we'll wait and see. It may well be that SS see it as their in-house underwriters covering the position. This over purchasing bug has been around as long as the secondary market, in excess of 18 months. SS have given up unwinding most (but not necessarily all) of the purchases. SS have said this should be fixed with the new website.
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jamesc
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Post by jamesc on Oct 20, 2015 14:47:48 GMT
I think its a good thing SS allowing the ability for loans to go negative there is nothing more annoying on other sites when you are all set to buy something and when you press the buy button you get back something like' you cannot purchase at this time'. Given how much the majority of the loans trade the negative balances soon clear. And for anyone one that cares it was PBL60 that caused the overshoot, someone put £16k up to sell and a £10k and a £16k went through at the say time, only goes to show that are a a lot of people with a lot more money than me.
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ablender
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Post by ablender on Oct 20, 2015 15:02:59 GMT
Yes, related to my previous example, I do understand that I will need to have or transfer enough funds.
I was wondering if there is a risk that someone can take this to a level that puts the whole SS platform at risk.
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SteveT
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Post by SteveT on Oct 20, 2015 15:04:27 GMT
Yes, related to my previous example, I do understand that I will need to have or transfer enough funds. I was wondering if there is a risk that someone can take this to a level that puts the whole SS platform at risk. I doubt it; SS are perfectly able to cancel loan part purchases that need to be cancelled (they already do this where lenders don't transfer funds to clear their BACS deficit in reasonable time)
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mikes1531
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Post by mikes1531 on Oct 20, 2015 15:32:49 GMT
I think its a good thing SS allowing the ability for loans to go negative there is nothing more annoying on other sites when you are all set to buy something and when you press the buy button you get back something like' you cannot purchase at this time'. Given how much the majority of the loans trade the negative balances soon clear. I can think of something that might be more annoying... and that's being told that you've bought and paid for a loan part when, in fact, someone else bought it before you did. The issue then becomes one of how SS deal with this situation. If they assign to you the next parts in this loan that are offered for sale, then the problem goes away. But if, OTOH, they cancel your purchase and give you your money back, that's not so nice.
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sam i am
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Post by sam i am on Oct 20, 2015 21:18:26 GMT
So the above posts describe our normal understanding of how negative availability arises. Multiple purchases are made at or about the same time. But now consider the current situation with PBL4b. This has availability of £-7,730. But the total purchases today are about £3,000. Any ideas how this has arisen?
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Post by pepperpot on Oct 20, 2015 22:09:18 GMT
Built up over multiple days without being rectified?
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paulg
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Post by paulg on Oct 20, 2015 22:20:52 GMT
Built up over multiple days without being rectified? I don't think so. PBL48 suddenly went £50k negative on 12th October without any explanation from SS, but it can only have been from an intervention by them. Maybe it represents a partially repaid loan.
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