warn
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Curmudgeon
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Post by warn on Dec 9, 2015 10:41:58 GMT
DON'T accept sell orders for parts that haven't been paid for. I just happened to look at the SM at a good time this morning. There was an available chunk of a loan I'm light on, so I bought it. My transfer for yesterday's purchases and sales had already gone through, so balance = £-500. Can I then not sell until I've cleared that? Because what happened was I sold a chunk of a (new terms) loan that yesterday left me overweight on, and a chunk of a short-remaining loan. Balance = £0, within two minutes of first going to the site. If I couldn't sell until I'd paid, then I'd have had to sell the parts first, then wait for a part to come available to rebalance. In practice, I wouldn't have bothered. The available chunk of the loan you were light on, and bought, stays reserved until you've paid for it (presumably within 48 hrs, as at present). You can't sell it yet. You can sell any other parts that you actually own (i.e. have paid for). The status of your cash account (+ or -) isn't relevant. As far as I understand them, the rest of your transactions wouldn't have been affected.
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kaya
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Post by kaya on Dec 9, 2015 11:28:01 GMT
Prefunding is very handy, but is a dubious practice. Where else in the world can you make an investment when your account is empty? If financial regulaters come along, they might not like that. And if you can earn a day's interest on pre-funded loans without funding the deficit, that is madness. Can you?
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ablender
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Post by ablender on Dec 9, 2015 11:39:59 GMT
Prefunding is very handy, but is a dubious practice. Where else in the world can you make an investment when your account is empty? If financial regulaters come along, they might not like that. And if you can earn a day's interest on pre-funded loans without funding the deficit, that is madness. Can you? I think it is working perfectly here. I am not one with lots of money but manage to buy on SM. This is not the result of using automated system or because I have a fast internet (mine is below 1.5kbits [or is it Mbits - one or the other]).
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jonah
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Post by jonah on Dec 9, 2015 11:44:43 GMT
Prefunding is very handy, but is a dubious practice. Where else in the world can you make an investment when your account is empty? If financial regulaters come along, they might not like that. And if you can earn a day's interest on pre-funded loans without funding the deficit, that is madness. Can you? You earn interest immediately, so yes, you can get a day's before the funding gap is closed. This leads to an obvious 'abuse' of the system which could be possible and I suspect has occurred on some of the historical larger loans. Ignoring regulators for a minute, this overall process works really well for an investor (say me!) so I wouldn't want to lose a real strength of this platform. Considering regulators, SS have their interim authorization number, so I assume will be going for full approval in 2016. That is likely to cause a number of platforms a set of challenges I suspect. Kev suggested that RS were spending 0.25m on being ready for that, so this won't be an easy or cheap hurdle to get through.
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gt94sss2
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Post by gt94sss2 on Dec 9, 2015 13:19:23 GMT
The available chunk of the loan you were light on, and bought, stays reserved until you've paid for it (presumably within 48 hrs, as at present). You can't sell it yet. You can sell any other parts that you actually own (i.e. have paid for). The status of your cash account (+ or -) isn't relevant. As far as I understand them, the rest of your transactions wouldn't have been affected. I suspect like several others I like holding round figures in my account - so if I was allocated say 741.23 in a new loan, its likely I would sell the 41.23 and transfer £700 across (or a real example: I bid for £400 for something on the SM this morning - and got £20.97 - which I immediately sold again as I don't want such a small part) I can do this at present. I wouldn't necessarily want to sell parts in other loans. If we followed your proposed model it would mean my having to pay for the entire amount, then sell the £41.23/£20.97 and finally transfer that out of SS. I can't see the value of this - either for SS (more work/transactions to deal with) or users as all you are effectively doing is moving when the SM gets parts for sale. It may stop a degree of overbidding but not for those investors who have liquid funds in reserve to cover them (even if they don't really want that many)
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TitoPuente
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Post by TitoPuente on Dec 9, 2015 13:27:14 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. That proposal will put new investors at a serious disadvantage.
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kaya
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Post by kaya on Dec 9, 2015 13:42:56 GMT
If you earn interest immediately, without having funded your deficit, this is amazing good news! I calculate that for each million pounds that I can manage to get a slice of, say over several loans by asking for rediculous prefunding amounts, that I can make £328 per day! Please correct me if I am wrong. If so, then SS are effectively giving you the chance to create money out of nothing! At present this is a dream loophole for the rich that needs closing down.
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SteveT
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Post by SteveT on Dec 9, 2015 13:48:15 GMT
If you earn interest immediately, without having funded your deficit, this is amazing good news! I calculate that for each million pounds that I can manage to get a slice of, say over several loans by asking for rediculous prefunding amounts, that I can make £328 per day! Please correct me if I am wrong. If so, then SS are effectively giving you the chance to create money out of nothing! At present this is a dream loophole for the rich that needs closing down. Except that, back in the real world, that notional interest isn't paid until the month end, giving SS ample time to take action on your account, as they've said has happened in the past. There are loads of other areas in life where you receive goods or a service and then presented with the invoice to pay by the specified due date. If you pay up you are treated as a good customer, if not you are blacklisted. How is this any different?
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gt94sss2
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Post by gt94sss2 on Dec 9, 2015 13:48:33 GMT
Prefunding is very handy, but is a dubious practice. Where else in the world can you make an investment when your account is empty? If financial regulaters come along, they might not like that. Actually my broker - a high street bank (HSBC) - allows this. If it wasn't allowed, I suspect the regulators would have prevented it years ago.
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huxs
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Post by huxs on Dec 9, 2015 13:56:32 GMT
That seems eminently fair and feasible... Comments please. That proposal will put new investors at a serious disadvantage. The alternative being suggested at the time was that everyone would have to pre load their accounts to finance the prefunding amount which I believe would be a huge backwards steps.
This approach would only require new investors or people who want to greatly increase their investment to put up cash in advance of loans going live (my suggestion would be that if you have £1000 in your account you could prefund all pipeline loans for that amount, you wouldn't need to have £10,000 to prefund 10 loans for £1,000 each).
While this could be seen as unfair initially it would quickly get less unfair as you get more loan parts. A way to remove this disadvantage to new investors is to change the % based on the number of loans you hold so (While I always belief in keeping things and therefore I would, if it was my decision, not bother with this):
0 Loans, you must pre load cash to allow you to prefund 1 Loans, you can Prefund up to the value of your first loan 2 Loans, you can Prefund up to 80% value of your total loan amount 3 Loans, you can Prefund up to 70% value of your total loan amount ..... 10+ Loans, you can Prefund up to 10% value of your total loan amount
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TitoPuente
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Post by TitoPuente on Dec 9, 2015 14:06:31 GMT
That proposal will put new investors at a serious disadvantage. The alternative being suggested at the time was that everyone would have to pre load their accounts to finance the prefunding amount which I believe would be a huge backwards steps.
This approach would only require new investors or people who want to greatly increase their investment to put up cash in advance of loans going live (my suggestion would be that if you have £1000 in your account you could prefund all pipeline loans for that amount, you wouldn't need to have £10,000 to prefund 10 loans for £1,000 each).
While this could be seen as unfair initially it would quickly get less unfair as you get more loan parts. A way to remove this disadvantage to new investors is to change the % based on the number of loans you hold so (While I always belief in keeping things and therefore I would, if it was my decision, not bother with this):
0 Loans, you must pre load cash to allow you to prefund 1 Loans, you can Prefund up to the value of your first loan 2 Loans, you can Prefund up to 80% value of your total loan amount 3 Loans, you can Prefund up to 70% value of your total loan amount ..... 10+ Loans, you can Prefund up to 10% value of your total loan amount
Any set of rules based on the size of the portfolio of each individual lender is unfair by definition. There were other proposals that made much more sense: - Putting limits to pre-funding depending on loan size.
- Holding the ability to sell in the SM for a number of days.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Dec 9, 2015 14:08:55 GMT
Only been on SS for a few weeks now, but have been operating other p2p accounts for 3+ years (FS, RS, TC, AC). Some aspects of SS I like but the whole thing feels far to much like a fast fingered casino game and not enough like a serious p2p investment site. That worries me. - Any environment where you have to pre-fund humongous amounts of monopoly money in order to get a sensible initial allocation is daft
- Any environment where you have to blaze away machine-gun fashion without any DD in order to pick up anything on SM is daft
My instinct says beware of an environment like this. The whole things seems to be running on a sentiment of enthusiasm and exuberance; not a good basis for sound investment decision making and long term stability. Unless things are managed properly sentiment will change, the bubble will burst. It could all end in tears. AC is often criticised for being overly complex, but at the moment I feel that my money there is in a much better managed and more stable environment than on SS. There have been some very good suggestions in this thread to cool it down and end the madness. Unless some or most of them are followed I think I will be avoiding any further investment in SS I joined AC and SS when PBL002 went live 18 months ago. There is currently an insatiable demand for loans on both platforms. It just depends on how the loans are distributed amongst lenders. Both methods work for me. If AC were still offering pre-funding with Go Cardless, 12% interest on every loan, and a first come first served SM (version 1 pre auto-bid), it would be just as mad.
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huxs
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Post by huxs on Dec 9, 2015 14:34:37 GMT
Edit## Not sure where my comments went when I replied to this so will have to type them again !!
Obviously I think my way will work best  but you are right there are many views on here and SS good luck choosing the best. Not wanting to force my views on anyone my views on the two you have mentioned are:
Putting limits to pre-funding depending on loan size. I think was mentioned when prefunding was first looked at an SS raised concerns that this would scare away the really big hitters and also not sure how this will stop the small timers like me asking for 4 times what I want to make sure I get what I ask for.
Holding the ability to sell in the SM for a number of days, I think we greatly reduce flexibility for everyone and could have wide ranging consequences. Given that loan go-lives are unpredictable what happens if I have free cash to fund 2 loans of £1000 today but actually 3 go-live, today I could sell on the SM the extra £1000 (probably in £333 bits across the 3 loans) if I was restricted to not being able to sell then I would have to go onto the SS not step (and have at least 1 of the loans taken off me after 48hrs) or sell a kidney  . Obviously people will say I should manage my prefunding amounts more carefully and never have more in prefunding than I can fund straight away but that would be far to much admin for me and ruin any chance of my funds being fully allocated.
The alternative being suggested at the time was that everyone would have to pre load their accounts to finance the prefunding amount which I believe would be a huge backwards steps.
This approach would only require new investors or people who want to greatly increase their investment to put up cash in advance of loans going live (my suggestion would be that if you have £1000 in your account you could prefund all pipeline loans for that amount, you wouldn't need to have £10,000 to prefund 10 loans for £1,000 each).
While this could be seen as unfair initially it would quickly get less unfair as you get more loan parts. A way to remove this disadvantage to new investors is to change the % based on the number of loans you hold so (While I always belief in keeping things and therefore I would, if it was my decision, not bother with this):
0 Loans, you must pre load cash to allow you to prefund 1 Loans, you can Prefund up to the value of your first loan 2 Loans, you can Prefund up to 80% value of your total loan amount 3 Loans, you can Prefund up to 70% value of your total loan amount ..... 10+ Loans, you can Prefund up to 10% value of your total loan amount
Any set of rules based on the size of the portfolio of each individual lender is unfair by definition. There were other proposals that made much more sense: - Putting limits to pre-funding depending on loan size.
- Holding the ability to sell in the SM for a number of days.
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star dust
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Post by star dust on Dec 9, 2015 15:05:31 GMT
I am struggling to know what the issue is, other than excessive demand, and a sense of outrage at people 'gaming' the system. There were circa 1200 investors in yesterday's loans, for the smaller loan that averages at c £350, so worst case scenario we all game the system with £250k pre-funds and get a prorated £350 each (and if you want less, sell the surplus). If the current system doesn't bother SS it doesn't bother me.
I'm not sure (but stand to be corrected) that I've seen many people complain they haven't got what they wanted. I have seen people on AC complain at the small allocations they've received as a result of the pro-rated allocation on small popular loans there. I've even seen people complain they haven't got anything on MT with it's pre-announced 24hr % caps 'cause they didn't get home fast enough and the loans have sold out (sometimes even in minutes for very small ones). More loans of all sizes to match or outpace investor growth, and barring bad news, I think this will settle. I'm hoping SS are on the way to deliver this.
Few systems are neutral to all, and a lot of systems can be abused, some people will still game with loan caps it will just lower the 'magnification', restrictions based on holdings / cash balance will be gamed by deep pockets, not allowing sales of allocated amounts will cause other problems, over complicating it will put a lot of people off. I'm trusting SS to sort out the extreme serial abusers trying to bid for what they can't possibly fund or garner unfunded interest.
The current system suits me fine, and I feel it will settle with greater deal flow, but I'm also assuming SS know their investor base so if they feel a change is needed they come up with something as equitable to all as possible, and as simple as possible; but P.S don't forget to tell us beforehand.
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adrianc
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Post by adrianc on Dec 9, 2015 15:26:40 GMT
Today's pre-fund has resulted in 90% allocation... and the SM is nowhere near as hectic as it was yesterday. Bits are almost waiting to be purchased...
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but you are right there are many views on here and SS good luck choosing the best. Not wanting to force my views on anyone my views on the two you have mentioned are:
. Obviously people will say I should manage my prefunding amounts more carefully and never have more in prefunding than I can fund straight away but that would be far to much admin for me and ruin any chance of my funds being fully allocated. 