j
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Penguins are very misunderstood!
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Post by j on Dec 15, 2015 0:04:17 GMT
Easiest option surely would be to place a limit for each individual investort dependig on loan size for first 24 hours, then open it up to either pre-funding limits pro-rat or on sale on SM after the 24 hours. The limits should be set as per loan size (eg £100 for upto £100k loan, £250 per £250k loan, etc or whatever SS &/or its members see fit). The new system looks like it will still be open to abuse by the very big hitters.
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Post by pepperpot on Dec 15, 2015 1:31:49 GMT
Easiest option surely would be to place a limit for each individual investort dependig on loan size for first 24 hours, then open it up to either pre-funding limits pro-rat or on sale on SM after the 24 hours. The limits should be set as per loan size (eg £100 for upto £100k loan, £250 per £250k loan, etc or whatever SS &/or its members see fit). The new system looks like it will still be open to abuse by the very big hitters. It's not only open to BH abuse, but also 'proportional' abuse. If I have [say] £20k in total on SS but my largest loan is [say] £1k, how is a pf limit of £20k representative of my desired holding in a loan? Multiply that over all investors and the same problem still exists and the pre-funding levels reported on the Pre-Funding Information thread will continue to rise, the cap is actually only on the entire loan book - £60 odd million, which played out fully is what all small loans will have pre-funded... eventually. The only thing the rule in the OP prevents is the massive skews reported here that on it's own would have cut a fair chunk of %age off everyone's allocation in PBL071, but the missing £20k cap on <£500k loans would also have prevented that. I'm starting to appreciate the AC way of distributing oversubscribed loans which is pretty close to the 'bottom up' originally described by SS. There just isn't enough of a £500k loan to satisfy everyone and SS need to 'man up' and start dictating to everyone (inc. big hitters) how much they get, or the squabbling and dissatisfaction will also continue to rise. The smaller loans should just be seen as an added 'bonus' to help diversification. The main focus to satiate demand should be on the multi-million loans. I've always admitted to playing the system to try and land my desired level of allocation. If I'm not prevented from doing so, I'll continue to do it, because... and only because, others do and I hate losing out to gamers!!!  Somebody STOP me!!! Tell me how much I'm going to get in a loan and I can't argue if it's distributed proportionally either going off total loan book size / largest loan / cash on account / personally indicated (backed up with proof of funds) bidding levels, or a combination of some or all of these, possibly weighted to some over others as SS see fit, but don't tell anyone how the figure is arrived at, only that it's 'your proportionally allocated sum'. If the personally indicated levels regularly aren't met then they can be trimmed by SS. The only decision an investor should have is an 'opt in' or 'opt out' on the smaller loans, if there's a change of mind they can always sell out or reduce via the SM. Edit; sorry j that wasn't all directed at you, but once I started I couldn't stop...
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mikes1531
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Post by mikes1531 on Dec 15, 2015 4:27:10 GMT
Pre-funding limits will be variable for all depending on: Existing portfolio of loans; plus Cash on account at time of loan going live (we will need to get better at letting you know when they are going live so you can plan accordingly). We will let everyone have a guaranteed £10k bid in every loan which should accomodate new and small investors plus they can increase their bids by depositing cash to any amount. This is the fairest solution that we can think of to keep as many people as possible happy. I am very glad they have not introduced a '10% of lenders portfolio size' as a limit to pre-funding as this would make it very difficult for small investors to increase their holdings at a reasonable rate (£50-£100 per loan is going to take me a very long time to invest a reasonable amount unless the number of loans going through the pipeline increases substantially). : Didn't SS solve the problem you describe when they allowed everyone to put in a pre-fund bid of up to £10k to accommodate new and small investors? That should allow investors to be given four-figure allocations in every new loan, which should allow a portfolio to be built up reasonably quickly. I think that's a good feature of the SS proposal. As for the rest of the SS proposal, combined with the above £10k minimum bidding capacity for everyone, IMHO 100% of portfolio is far too high a limit. While I can easily imagine that a small investor might have put in a bid of more than 100% of their holding, I doubt that there would have been many with a £10k portfolio who would have pre-bid much more than that. How many people want to double their portfolio with a single loan? So I can't imagine that the SS proposal really would have much effect in reducing excessive pre-bidding. IMHO, a limit of more than 25% wouldn't make a significant impact. If SS have data that say it would, then they can give a high percentage limit a try and see if it has the desired effect -- and reduce the percentage limit later if necessary.
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mikes1531
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Post by mikes1531 on Dec 15, 2015 4:36:02 GMT
Easiest option surely would be to place a limit for each individual investort dependig on loan size for first 24 hours, then open it up to either pre-funding limits pro-rat or on sale on SM after the 24 hours. I could accept opening a loan to allocations based on pre-funding bids after the 24 hours, but I wouldn't want the excess just to be dumped onto the SM. That would take us straight back to the dark ages before pre-funding, when the release of a new loan resulted in a horrible scrum and fastest finger situation -- and probable website collapse due to the overload -- where some people got all they wanted and others got nothing. And anyone unable to be on the website at the moment of release also got nothing at all. Pre-funding was a giant step forward from that horrible old situation and I certainly wouldn't want to head back in that direction.
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SteveT
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Post by SteveT on Dec 15, 2015 7:54:43 GMT
Thinking on this more overnight, presumably for SS to propose a "100% of portfolio + cash" limit (enormously higher than proposed on here previously) means they can see examples of "abuse" of the pre-funding system that this would rein in. Therefore, since I cannot see why it would pose issues for any "normal" lender, I think it should be supported. The 100% can easily be reduced to 75% / 50% / 25% / 10% later if further restrictions are deemed necessary.
More important from my perspective is to put sensible pre-fund caps in place on all smaller loans. If £10k is to be the minimum cap (for loans up to £500k?) then perhaps have a £20k cap for <£1m and £50k cap for <£2m. Or even simpler, decide that any loan below £2m will have a pre-fund cap of 2% of the loan.
Answering my own questions from yesterday, a personal pre-fund limit only make senses on a "per loan" basis, not a "whole pipeline" basis, else the effects will be skewed hugely by the size of the pipeline (there could be 2 pipeline loans or 20).
And I think the personal limit can only realistically be applied at the moment a new loan is launched, else the whole process becomes highly complicated by considerations of portfolio size changes between pre-fund setting and loan launch.
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dawn
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Post by dawn on Dec 15, 2015 8:06:08 GMT
I am very glad they have not introduced a '10% of lenders portfolio size' as a limit to pre-funding as this would make it very difficult for small investors to increase their holdings at a reasonable rate (£50-£100 per loan is going to take me a very long time to invest a reasonable amount unless the number of loans going through the pipeline increases substantially). : Didn't SS solve the problem you describe when they allowed everyone to put in a pre-fund bid of up to £10k to accommodate new and small investors? That should allow investors to be given four-figure allocations in every new loan, which should allow a portfolio to be built up reasonably quickly. I think that's a good feature of the SS proposal. As for the rest of the SS proposal, combined with the above £10k minimum bidding capacity for everyone, IMHO 100% of portfolio is far too high a limit. While I can easily imagine that a small investor might have put in a bid of more than 100% of their holding, I doubt that there would have been many with a £10k portfolio who would have pre-bid much more than that. How many people want to double their portfolio with a single loan? So I can't imagine that the SS proposal really would have much effect in reducing excessive pre-bidding. IMHO, a limit of more than 25% wouldn't make a significant impact. If SS have data that say it would, then they can give a high percentage limit a try and see if it has the desired effect -- and reduce the percentage limit later if necessary. : That is what I was saying - I am glad SS didn't go with the 10% proposed by many people on the forum over the previous few days. A lot of people seemed to favour the 10% limit - and I am pleased that SS didn't go with it. I think the 10K (which is way over anything I would be bidding) will help diversification. Sorry if I wasn't clear - it was late at night when I typed my previous message.
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warn
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Curmudgeon
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Post by warn on Dec 15, 2015 8:28:06 GMT
Over complicated. Simply prohibit the sale of new loan "won" parts until they have been paid for. I suggested that earlier (in another thread), but it was pointed out that I had not appreciated that some might then have to suffer the untold mental torment of carrying a non-zero digit in the pence column for 48 hours, thus rendering the idea impracticable.
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SteveT
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Post by SteveT on Dec 15, 2015 8:31:40 GMT
Over complicated. Simply prohibit the sale of new loan "won" parts until they have been paid for. I suggested that earlier (in another thread), but had not appreciated that some might then have to suffer the untold mental torment of carrying a non-zero digit in the pence column for 48 hours, thus rendering the idea impracticable. Also that would require SS to limit themselves to 1 loan launch per day, or at least flag that certain loans will be launched together (numbering them ??a, ??b, ??c would suffice)
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registerme
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Post by registerme on Dec 15, 2015 8:58:02 GMT
I'm finding this difficult to comment on without understanding more about the problems Saving Stream are trying to fix - "fair" distribution, stopping abuse of pre-funding / free BACS options, reducing risk of individual lenders getting massively over-exposed to one loan, reducing secondary market gyrations, facilitating new investors getting on board, managing small and large loans, or all of the above, and if so what weighting do they give each?
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davex
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Post by davex on Dec 15, 2015 9:17:42 GMT
It all sounds very complicated.
Why not just block sales on the secondary market for say 10 days after the initial launch?
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treeman
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Post by treeman on Dec 15, 2015 9:20:21 GMT
Or until draw-down
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Post by meledor on Dec 15, 2015 9:29:01 GMT
I support the proposals; they are simple and fair. Setting a pre-funding amount without having to put up the cash in advance is an attractive feature of the platform but there were concerns expressed (most recently after the Gloucestershire loans) about people gaming the system. Yet it is important that big hitters and deep pockets are not penalised - we all benefit from them in that they enable a greater deal flow on the platform as it grows. So the requirement for bids in excess of £10k to be backed by an existing loan portfolio or else cash has to be deposited in advance seems reasonable.
I would not support any suggestions to complicate things by reducing the amount that could be bid by applying a percentage (10% etc) to the portfolio.
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ianj
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Post by ianj on Dec 15, 2015 9:52:20 GMT
I would not support any suggestions to complicate things by reducing the amount that could be bid by applying a percentage (10% etc) to the portfolio. The only 'complication' would be the calculation of what any percentage of my current portfolio might be. I think I can achieve this without recourse to the use of a calculator!
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freddy
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Post by freddy on Dec 15, 2015 10:02:23 GMT
Sorry if I'm being dense but am I understanding this? How will this stop over bidding on pre funds. A £100k holder wanting £10k on a new loan could bid £100k or £110k if they want to deposit £10k before Go Live. Providing they avoid applying this tactic to the multi million loans their unlikely to be caught with their pants down.
May as well leave things as they are. Given the amount in the pipeline currently, I'd be interested to see what the next couple of months brings both with PF and the SM. Come January/February SS members may have very different views on what are or aren't problems (certainly ones that need fixing).
Given the limits that SS are proposing my perception is that there may be a few SS investors who are massively gaming the system and causing SS problems. i would prefer that any SS measures be designed to directly combat those particular individuals without making the system more complicated for the average investors which probably amount to 95%+ of us. Do we need to be involved?
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awk
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Post by awk on Dec 15, 2015 10:06:32 GMT
Generally, I would resist ANY restrictions. However, there is clearly something which needs addressing here when chunks of £60k+ have rapidly been appearing on the SM.
I have certainly 'gamed' it a bit, but the maximum I have ever bid is about 25% of my existing portfolio and certainly less than £10k.
However, SS have clearly modelled this and feel it will help and stop some of the really silly bids which distort the whole allocation - I hate to think what some have been doing and what would happen if they couldn't have sold on the SM.
Once implemented, the percentage can always be tweaked if really necessary.
Therefore, I support it - well done SS for listening and acting quickly.
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Somebody STOP me!!! 
