Liz
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Post by Liz on Dec 8, 2015 19:26:04 GMT
That seems eminently fair and feasible... Comments please. I think the obvious answer is not to allow the re-sale market on the new loans to start immediately. The current situation allows people to over subscribe knowing full well they can sell immediately without adding any more funds to their account. If the re-sale market on new loans was held back for say 7 days, then people would only pre-fund what they were actually prepared to pay out for by putting money in their accounts. After 7 days the resale market on new loans could be opened, and people could buy and sell as they pleased. Great idea, I think 3 or 4 days would work. The 10% would also work well, assuming your first 5 pre funds are unrestricted. An increase in the pipeline may make this discussion irrelevant.
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registerme
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Post by registerme on Dec 8, 2015 19:28:54 GMT
Same here am , but in the face of a general rout, which whilst we should all hope we never see I consider to be one of the bigger risks we / the platform face, could see the over-demand flip 180 to over-supply overnight. The way I approach this at the moment is to have a "watch list" of loans where I've already decided I want more exposure, and then if I happen to see any come up buy. But it could be so much better implemented as functionality provided by the platform. Be able to set target investment sizes for loans PBL a, b and c, have some kind of queue (simple and transparent), and have funds ready to go and / or a commitment to fund post purchase (perhaps with a penalty if you don't meet the offer when it gets made..... Sounds simple but that way lies Assetz Capital complexity with nanopence sized loan part shrapnel. Don't go there! I don't use AC so can't comment or compare, but whilst KISS is a brilliant design principle, sometimes simplicity just doesn't cut it. The harsh truth is that development always involves compromise, and compromise normally impacts some group or functionality negatively. It's up to SS to make the decisions, it's up to us to discuss things here to make those decisions more informed  . Even though I am sat in front of a PC for most of the day, and I am in London, and on a BT Infinity link, I basically can't use the SM to buy at the moment. Partly that's down to demand, but partly it's down to how that demand is managed by the platform.
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Post by marek63 on Dec 8, 2015 19:30:00 GMT
savingstream I'd suggest that 10% of an investors current portfolio is a good place to start for maximum 'unfunded'. This is supposed to be a long term investment site for rational investors not a short selling and day trading site, which is what it has become recently. That cannot be what the management or most of the investor base want, and is definitely not something that I assume you would be proud to have a regulatory discussion about. Eg: 'Oh, so how do your investors provide funds to your borrowers?'. 'Well we give them a temporary loan of whatever they desire and let them sell other pieces of their portfolio to back that up or transfer money to us on an honour system'. 'And what happens if another loan happens to default in the middle of this process and everyone decides to sell that loan so your investors could not get liquidity - would you provide liquidity?' 'ahh, No, thats not what we do' 'So what would happen in that case? None of the outcomes sound great for investors, borrowers or the platform?' LIQUIDITY - great if you have it, but protect it, don't indulge in it or use it unwisely. All IMHO, but you have created somewhat of a monster which I would politely suggest you start to tame. If 10% free money is 'not enough' for your investors, you might want to think hard about what kind of investors you really want.
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ablender
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Post by ablender on Dec 8, 2015 19:32:09 GMT
I thought that SS's initially said that up to a certain level (let us say £100) every one will get what they bid for and beyond that it will be pro rata. Why has this system changed? It will be fair for small bidders because they get a fair share and good for deep pocketers as they get more than the small bidders on a pro rata basis. Anyone arguing that people with more money should have more privileges is not going to get my support.
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webwiz
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Post by webwiz on Dec 8, 2015 19:33:45 GMT
Surely the simplest solution, in general, is to limit "going short" to a percentage of their portfolio size *at all times*. So if 10% of your portfolio is £500 then your balance can never go more negative than -500 - be it because of a pre-fund request being satisfied or because you are buying on the SM. I like the simplicity of this. Is it really that simple? The portfolio size can go up and down during the period of pre-funding. So my portfolio is worth £10,000 and I prefund £600 and £400. Then I withdraw £1k. How does the system respond? Then I pay in another £1k. How does the system respond?
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Post by highlandtiger on Dec 8, 2015 19:36:53 GMT
I thought that SS's initially said that up to a certain level (let us say £100) every one will get what they bid for and beyond that it will be pro rata. Why has this system changed? It will be fair for small bidders because they get a fair share and good for deep pocketers as they get more than the small bidders on a pro rata basis. Anyone arguing that people with more money should have more privileges is not going to get my support. That is a very good point. Everyone gets £100 per loan, (5000 people x £100 is £500,000 which covers most small loans), with the rest of a higher loan on a pro rata basis.
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webwiz
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Post by webwiz on Dec 8, 2015 19:40:41 GMT
That seems eminently fair and feasible... Comments please. I think the obvious answer is not to allow the re-sale market on the new loans to start immediately. The current situation allows people to over subscribe knowing full well they can sell immediately without adding any more funds to their account. If the re-sale market on new loans was held back for say 7 days, then people would only pre-fund what they were actually prepared to pay out for by putting money in their accounts. After 7 days the resale market on new loans could be opened, and people could buy and sell as they pleased. The most likely result would be a surge in investors failing to clear their negative balance. This is not a problem for investors. If it is also not a problem for SS then it seems to have some merit.
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Post by marek63 on Dec 8, 2015 19:43:09 GMT
I like the simplicity of this. Is it really that simple? The portfolio size can go up and down during the period of pre-funding. So my portfolio is worth £10,000 and I prefund £600 and £400. Then I withdraw £1k. How does the system respond? Then I pay in another £1k. How does the system respond? And that illustrates exactly the reason to start monitoring the 'margin' level. If some investors feel the need to work at the maximum allowable loan margin all the time (and this is a loan margin or a 'short' trade), the broker (saving stream) has to set the margin for everyone at a level that is safe from a platform liquidity point of view. If investors are determined to push to their personal limit, as they rationally would, SS has to control the total available short funds (or 'unfunds') . The individual issue of whether you are allowed to borrow £900 or £1000 is interesting, but the real point here is that SS are allowing people to borrow almost unlimited amounts on an unhedged basis overnight. That's called gambling. And if the platform suffers because this is potentially reckless behaviour, we all end up worse off. Time to damp the system a bit. SS is supposed to be a P2P investment site.
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Post by highlandtiger on Dec 8, 2015 19:45:50 GMT
I think the obvious answer is not to allow the re-sale market on the new loans to start immediately. The current situation allows people to over subscribe knowing full well they can sell immediately without adding any more funds to their account. If the re-sale market on new loans was held back for say 7 days, then people would only pre-fund what they were actually prepared to pay out for by putting money in their accounts. After 7 days the resale market on new loans could be opened, and people could buy and sell as they pleased. The most likely result would be a surge in investors failing to clear their negative balance. Which would mean those loans would be taken off those investors and immediately reappear back on the SM, SS would not have to pay out any interest on any of those loans either, and repeat offenders could be barred (either temporarily or permanently), from accessing the prefunding pipeline system. Seems ok to me.
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webwiz
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Post by webwiz on Dec 8, 2015 19:45:39 GMT
I don't think the ability to fund afterward is the real problem and i would also hate to see to go. A percentage cap could probably work. Limit the per funding amount to 10 % of you total investment plus any cash balance. This will mean people who want more than 10% will have to transfer money into their accounts but everyone else will be restricted to a fairly decent chunk. That seems eminently fair and feasible... Comments please. Will this 10% limit check be applied just once at the time of pre-funding, or will it be dynamic as the portfolio value goes up and down? I see problems either way.
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mikes1531
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Post by mikes1531 on Dec 8, 2015 19:59:03 GMT
I like the simplicity of this. Is it really that simple? The portfolio size can go up and down during the period of pre-funding. So my portfolio is worth £10,000 and I prefund £600 and £400. Then I withdraw £1k. How does the system respond? Then I pay in another £1k. How does the system respond? It could be that simple, if the limits were applied at the time of the purchase/allocation rather than at the time of the pre-funding requests. So you can enter as many pre-funding requests as you like -- which seems to me to be appropriate because we don't know which ones would go live first. As loans go live, pre-funding requests are dealt with as now, but the first pre-funding allocation that would make an account more negative than 10% of its value would be truncated and limited to the amount that could be accommodated with a 10% negative balance. Since you can't withdraw if you have a negative balance, that shouldn't be a problem once you've hit your -10% limit. And if you made a withdrawal before loans went live, then that would mean your pre-funding requests would hit the 10% limit a bit sooner.
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webwiz
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Post by webwiz on Dec 8, 2015 20:00:09 GMT
1. Set pre-funding to a stated maximum percent of your asset and cash holding. 2. If your maximum percent is BELOW a stated monetary value (£500?), allow increased percentage bidding up to the minimum monetary value. 3. Prohibit the sale of loan parts until said loan parts have been paid for. I think this covers in one place what I feel are the good ideas made by others. This would allow big hitters to still buy big sums, allow small investors to build up their SS stake quicker and would restrict the gaming element in the current pre-funding model, which is only going to get worse unless changes are made. Para 1. Is this a limit on total pre-funding or per loan? Para 3. A problem is deciding when a particular loan has been paid for. You might have to tweak it to Prohibit the sale of the newly acquired loan parts whilst account is in deficit. (Edited for clarification as per adjacent posts)
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mikes1531
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Post by mikes1531 on Dec 8, 2015 20:18:09 GMT
3. Prohibit the sale of loan parts until said loan parts have been paid for. Para 3. A problem is deciding when a particular loan has been paid for. You might have to tweak it to Prohibit the sale of loan parts whilst account is in deficit. I may be misunderstanding webwiz 's suggestion, but if the sale of loan parts is prohibited when an account is in deficit then how could someone rebalance their account? If I get a fresh allocation of a new loan because I've put in a pre-funding request then I want to be able to sell parts of some of the loans that I'm overweight in so as to improve my diversification. When I saw the original proposal, I took hoy to be suggesting that if I get a fresh allocation of a new loan because I've put in a pre-funding request then I would be prohibited from selling parts of that loan until I had settled the negative balance, either by making a deposit or by selling parts of other loans. This would stop people from putting in huge pre-funding requests and then selling the part of their allocation that they really didn't want without having to pay for it in any way. PS. Cross-posted with hoy, but I take that post to mean my interpretation was correct.
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SteveT
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Post by SteveT on Dec 8, 2015 20:36:00 GMT
Although I'm not opposed to the suggested "10% of portfolio" limit, I still have to question whether the current system really needs changing to that extent. The last thing SS want is to undermine the platform's ability to fund really big loans quickly; it was only 8-10 weeks ago we were being bribed with cashback to fill 3 large loans.
All of the current issues relate to the recent trickle of small loans, which could much more simply be improved by putting in some better pre-funding caps for small loans (eg. <£500k = £10k, £500k-£1m = £20k, £1-2m = £50k).
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dawn
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Post by dawn on Dec 8, 2015 20:56:07 GMT
That seems eminently fair and feasible... Comments please. I am not sure this is fair on small investors. I have only a relatively small amount invested so 10% of that is tiny. If I can only pre-fund a tiny amount and then get only a small percentage of that for each new loan then it will take me a very long time to increase my holdings in SS (as trying to buy on the SM now is a joke for me due to very, very poor broadband links). So far I have transferred in all the money required for pre-funds when they've gone live - I have not had to sell any of my current holdings to pay for the pre-funds, although I plan to sell some bits of my older ones soon (which I bought on the SM several months ago before it became too difficult to use) just to diversify and reduce risk. If this proposed change had been in place before I would have far less invested in SS then I currently do. I think the main problem is the recent lack of loans - I think things will get better both for pre-funding and on the SM now there seems to be a healthy pipeline. I would like to leave things as they are for now and not do any knee-jerk changes just because things have been difficult over the last month. Also are people suggesting that this 10% cap applies only to small loans or to all loans - and what/where is the proposed cutoff between the different sizes of loan? We have several loans in the pipeline for several million pounds each - how will they be filled if the many small investors are limited to 10% of their total investment? Answer = the majority of the loan going to the big guys again and preventing the small guys from building their portfolios. As I said before the SM is not currently a viable option for sensible diversification for many of us so pre-funding is our best option at present. Maybe some-one will suggest 10% for small loans, 50% for middle size loans and no limits for large loans - but at what loan value do those divides happen and they would have to vary depending on how many loans were going live that day, how much was waiting in the pipeline, etc. The whole thing is going to get very messy and complicated if SS go down this route. Please leave things as they are for now - a healthy pipeline will probably sort out these recent short-term issues.
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