sl75
Posts: 2,092 
Likes: 1,245
|
Post by sl75 on Feb 26, 2016 16:00:57 GMT
What about top down? SS are to be commended for not doing this and looking out for the S&M investors. I read through your posts at it seems to me that you are mis-understanding what bottom-up means. It does not meant that people who bid less will have 100% of what they want before we move to the next person. It only means that we start sharing £1 or £10 per lender and then move on to the next money (if the lenders want more) until all money is used . In this way a top-down method cannot work as you cannot start by assigning 100% of the loan to each lender. That's just a matter of procedure... allocating the loan £1 or £10 at a time would be a VERY inefficent way to do it (and if done "live" would mean investors got dozens or hundreds of loan parts of £1 or £10 each, rather than a single loan part of their final allocation). A more effecient procedure would indeed work through investors 1 at a time, starting from the smallest, giving them 100% of their requirement. That procedure stops when there is not enough money in the pot to give all remaining investors the amount of the next investor's requirement, at which point the remaining pot is divided equally between all remaining investors (rounded down as appropriate), and the excess goes onto the market. Top-down allocation is certainly not a meaningless concept, and at some level does indeed seem to be used in other markets (where only "institutional investors" or "underwriters", etc. are permitted to apply for an initial allocation, whereas "retail investors" must buy on a secondary market).
|
|
|
|
Post by nanniema on Feb 26, 2016 17:03:38 GMT
Back on topic (ish) I see PBL084 now has a number, although it is still only at stage1. Documents available .. I wonder when it might hit the market? Tomorrow 27th.
|
|
ablender
Member of DD Central
Posts: 2,204
Likes: 555
|
Post by ablender on Feb 26, 2016 21:23:48 GMT
I read through your posts at it seems to me that you are mis-understanding what bottom-up means. It does not meant that people who bid less will have 100% of what they want before we move to the next person. It only means that we start sharing £1 or £10 per lender and then move on to the next money (if the lenders want more) until all money is used . In this way a top-down method cannot work as you cannot start by assigning 100% of the loan to each lender. That's just a matter of procedure... allocating the loan £1 or £10 at a time would be a VERY inefficent way to do it (and if done "live" would mean investors got dozens or hundreds of loan parts of £1 or £10 each, rather than a single loan part of their final allocation). A more effecient procedure would indeed work through investors 1 at a time, starting from the smallest, giving them 100% of their requirement. That procedure stops when there is not enough money in the pot to give all remaining investors the amount of the next investor's requirement, at which point the remaining pot is divided equally between all remaining investors (rounded down as appropriate), and the excess goes onto the market. Top-down allocation is certainly not a meaningless concept, and at some level does indeed seem to be used in other markets (where only "institutional investors" or "underwriters", etc. are permitted to apply for an initial allocation, whereas "retail investors" must buy on a secondary market). I have to disagree with you. Your system will not work, leaving some people with no investment at all. I'll try to demonstrate it with the following example. Investment £140, Investor A wants £10, Investor B wants £50, Investor C wants wants £100, Investor D wants £150 The way I explained it. (This is what I understand by bottom-up) Inv A Inv B Inv C Inv D Total Remaining First round £10 £10 £10 £10 £40 £100 Second round £0 £10 £10 £10 £30 £70 Third round £0 £10 £10 £10 £30 £40 Fourth round £0 £10 £10 £10 £30 £10 Totals/ investor £10 £40 £40 £40 £130 £10 The remaining £10 can be placed on the SM. (assuming that £10 is the minimum part that SS chooses to distribute/lender) The way you explain it Investor A gets £10 leaving £130 Investor B gets £50 leaving £80 Investor C gets £80 leaving £0 Investor D gets nothing. I do not see these two ways as identical and have no better way to explain them.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Feb 27, 2016 3:02:58 GMT
A more effecient procedure would indeed work through investors 1 at a time, starting from the smallest, giving them 100% of their requirement. That procedure stops when there is not enough money in the pot to give all remaining investors the amount of the next investor's requirement, at which point the remaining pot is divided equally between all remaining investors (rounded down as appropriate), and the excess goes onto the market.I have to disagree with you. Your system will not work, leaving some people with no investment at all. I'll try to demonstrate it with the following example. Investment £140, Investor A wants £10, Investor B wants £50, Investor C wants wants £100, Investor D wants £150 The way I explained it. (This is what I understand by bottom-up) Inv A Inv B Inv C Inv D Total Remaining First round £10 £10 £10 £10 £40 £100 Second round £0 £10 £10 £10 £30 £70 Third round £0 £10 £10 £10 £30 £40 Fourth round £0 £10 £10 £10 £30 £10 Totals/ investor £10 £40 £40 £40 £130 £10 The remaining £10 can be placed on the SM. (assuming that £10 is the minimum part that SS chooses to distribute/lender) The way you explain it Investor A gets £10 leaving £130 Investor B gets £50 leaving £80 Investor C gets £80 leaving £0 Investor D gets nothing. I do not see these two ways as identical and have no better way to explain them. : I think you've misinterpreted part of sl75's procedure -- the sentence I've bolded. In your second procedure, after Investor A gets their £10, there's £130 left. Since that isn't enough "to give all the remaining investors the amount of the next investor's requirement" (which is £50), the remaining pot £130 is "divided equally between all remaining investors" . £130/3 = £43.33, so when it is "rounded down as appropriate" the result is £40, and that's what investors B, C, & D get. The excess £10 then goes onto the SM. The end result is the same as your first example. The only difference between your bottom-up procedure and sl75's is that yours allocates tenners to the larger investors one at a time, whereas sl75's makes a single distribution to each investor. As long as the system is doing the calculations first, and then distributing each investor's allocation as a single part, it doesn't make any difference at all. The only time it would make a difference would be if all the investors were given piles of £10 parts with the system dealing them out like a deck of cards. But it doesn't, so ISTM that a mountain is being made out of a molehill.
|
|
sl75
Posts: 2,092
Likes: 1,245
|
Post by sl75 on Feb 27, 2016 15:57:21 GMT
The way you explain it Investor A gets £10 leaving £130 Investor B gets £50 leaving £80 Investor C gets £80 leaving £0 Investor D gets nothing. I do not see these two ways as identical and have no better way to explain them. No, that's not what I said. Step 1: £140 remaining, 4 investors still remaining (average £35 available per investor) Investor A wants £10, which is less than allocation, so they are allocated in full, and removed from our list of investors requiring allocation. Step 2: £130 remaining, 3 investors still remaining (average £43.33 available per investor) Investor B wants £50, which is more than allocation, so procedure stops. Allocate £43 (or £40) to all remaining investors. Place the remaining £1 (or £10) onto the market to be allocated by fastest-finger-first. Note that, because investors are processed "bottom up", every investor who wants less than the current requirement is allocated 100% of their requirement in a single step (your example numbers have only 1 investor allocated in full). All remaining investors are also allocated their holding in a single step. There's absolutely no need for multiple "rounds".
|
|
ablender
Member of DD Central
Posts: 2,204
Likes: 555
|
Post by ablender on Feb 27, 2016 16:31:03 GMT
Now it is clearer in my mind. What I had understood is that there will be lenders who end up having no allocation at all.
|
|
sl75
Posts: 2,092
Likes: 1,245
|
Post by sl75 on Feb 27, 2016 18:18:56 GMT
Now it is clearer in my mind. What I had understood is that there will be lenders who end up having no allocation at all. Ok... and the point is that this "bottom up" method starting from the smallest investors until the money "runs out" (for a suitable definition of "runs out"), can be reversed for a "top down" method, starting from the largest investors until the money "runs out" for a (necessarily different) suitable definition of "runs out". In the wider marketplace, however, bottom-up has been taken further in the manner you suggest - e.g. with the Royal Mail IPO, people who asked for more than a certain amount were indeed given no allocation at all! Top-down (with the assumption that the smaller investors get no allocation at all) has the advantage that the deal can be struck with the minimum number of investors possible. Such distributions usually wouldn't even bother inviting small investors to participate at all. The current AC primary market (where only large investors known as "underwriters" are able to participate) would be one nearby example of this, and I'd understand plenty of traditional markets to work this way too.
|
|
ablender
Member of DD Central
Posts: 2,204
Likes: 555
|
Post by ablender on Feb 28, 2016 0:00:51 GMT
According to your latest explanation, where some people get no allocation, is not what I understand to be the spirit of P2P and thus have to disagree with them in principle.
|
|
adrianc
Member of DD Central
Posts: 10,014
Likes: 5,142
|
Post by adrianc on Feb 28, 2016 9:14:03 GMT
Ok... and the point is that this "bottom up" method starting from the smallest investors until the money "runs out" (for a suitable definition of "runs out"), can be reversed for a "top down" method, starting from the largest investors until the money "runs out" for a (necessarily different) suitable definition of "runs out". Top-down (with the assumption that the smaller investors get no allocation at all) has the advantage that the deal can be struck with the minimum number of investors possible. Scope for gaming? No... None of that... Let's look at how that might apply to, say, the Liverpool BTL in the pipeline. £158k. One BHitter puts in for the full amount. Bingo. Loan funded. Nobody else gets near it. Two BHitters put in for the full amount. Now what? 50% allocation? Hmm, thinks everybody else that's allowed to bid that high. Let's get in on this game. 500 MHitters and BHitters put in for the full amount. 0.2% allocation. £300 each. Nobody who isn't allowed to bid £160k or above can get near it.
|
|
webwiz
Posts: 1,133
Likes: 210
|
Post by webwiz on Feb 28, 2016 9:27:23 GMT
According to your latest explanation, where some people get no allocation, is not what I understand to be the spirit of P2P and thus have to disagree with them in principle. I think this theme started with my idea of splitting large loans, over say £2m, into two tranches, one of say £1m and the other of the remainder. Lenders only have one pre-fund which covers both tranches. The smaller tranche would be allocated bottom up to exhaustion (unlike loans which are <£1m in total) which indeed means that larger prefunders get nothing from that tranche, however these are then allocated from the second tranche on the current proportional basis. This would cater for the needs of both S&M investors and BHs and might discourage gaming because gamers might miss out on the first tranche. Another way of looking at it is to say that the allocation process is tweaked so that the first £1m (say) of each loan over £2m (say) is allocated bottom up and the remainder proportionally.
|
|
|
|
Post by GSV3MIaC on Feb 28, 2016 10:26:22 GMT
First million bottom up (current method, i.e. even BH's get their £500-£700 worth), the rest proportional, has already been suggested and would get my vote. Or even first £500k (giving the BH a larger share of the sub £1m loans). Something to discourage those who only want £500 from leaping in with ever larger 'gamed' requests until they finally manage to come unstuck (at a 20x multiplier or whatever). The SM is getting on towards saturated (but not quite yet, and there is some more interest arriving Tuesday) .. eventually even m********8 is going to have enough of the older loans.
|
|
sl75
Posts: 2,092
Likes: 1,245
|
Post by sl75 on Feb 28, 2016 11:30:23 GMT
Scope for gaming? No... None of that... Let's look at how that might apply to, say, the Liverpool BTL in the pipeline. £158k. One BHitter puts in for the full amount. Bingo. Loan funded. Nobody else gets near it. Two BHitters put in for the full amount. Now what? 50% allocation? Hmm, thinks everybody else that's allowed to bid that high. Let's get in on this game. 500 MHitters and BHitters put in for the full amount. 0.2% allocation. £300 each. Nobody who isn't allowed to bid £160k or above can get near it. Would probably go for an "all or nothing" allocation rather than splitting - after all, the supposed point of this system was to have an initial allocation to as few people as possible (made more sense in traditional markets, where there was a non-negligible amount of work involved), so some way would be found to choose between the multiple bids of the full amount. (indeed, in many other markets, some other aspect would be primary - e.g. whoever bids the highest amount of money, lowest yield, etc.) In any case, I took webwiz's comment "What about top down? SS are to be commended for not doing this and looking out for the S&M investors." as conceptual, rather as a serious suggestion of a detailed policy SS could or should follow. Other "P2P" investors do indeed seem to do such a thing - offering "whole loans" to their largest investors.
|
|
|
|
Post by GSV3MIaC on Feb 28, 2016 15:34:58 GMT
And there is some merit offering an incentive for underwriters who are willing to take it, lots of it, if nobody wants it, or leave it for others if there is a lot of demand.
Where it breaks down at FC, and AC and a few other places is that the underwriters are collecting their 'cream' even when there is quite enough demand from elsewhere to satisfy the requirement. The original FC model where we'd start with 'I'll take £20k of that at 14% if nobody wants it' and let all the live people chip away with their 12.9% and 13.5% bids was fine. The current system where FC decides "it is 8.3%, anyone want it at that? .. if not autobiddies will fill it for us" is exactly bass-ackwards, IMO.
|
|
adrianc
Member of DD Central
Posts: 10,014
Likes: 5,142
|
Post by adrianc on Feb 29, 2016 8:32:48 GMT
And there is some merit offering an incentive for underwriters who are willing to take it, lots of it, if nobody wants it, or leave it for others if there is a lot of demand. Where it breaks down at FC, and AC and a few other places is that the underwriters are collecting their 'cream' even when there is quite enough demand from elsewhere to satisfy the requirement. The original FC model where we'd start with 'I'll take £20k of that at 14% if nobody wants it' and let all the live people chip away with their 12.9% and 13.5% bids was fine. The current system where FC decides "it is 8.3%, anyone want it at that? .. if not autobiddies will fill it for us" is exactly bass-ackwards, IMO. Then there's LC... "Let's pretend it's an auction, but stuff it full of underwrite cash at the last minute, bouncing 2/3 or more of real-live bids out."
|
|
|
|
Post by dodgeydave on Feb 29, 2016 12:07:32 GMT
The val doc should be with us before '9am Monday morning'; painful this! So, val comes in Monday morning, we put it up on the platform and release the 48 hours notice to go live, so we are looking at c Weds go live and hopefully simultaneous completion. The loans are filled according to the prefunding data. Wolsey valuation coming through, completion aiming for end of the week. Fully funded as well. Leatherhead Surry detached house. End of the week or beginning of following. FF'd. I think we have to assume Hull will not launch without another 3 valuations. But what is happening about Wolsey. That should of been launched the 19th Feb
|
|
