shimself
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Post by shimself on Feb 12, 2016 14:44:27 GMT
I thought somewhere I had seen a post about selling on Assetz at a premium, but I can't find it. I get the impression it's impossible, is that right?
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Post by Butch Cassidy on Feb 12, 2016 14:49:51 GMT
I thought somewhere I had seen a post about selling on Assetz at a premium, but I can't find it. I get the impression it's impossible, is that right? Currently not possible but when the new trading system was being discussed/proposed last year it was mooted as possible/likely for the future. Was relevant because lenders wanted the ability to sell at a discount to aid liquidity, as was possible under a previous system but was removed & subsequently reinstated after lender requests/pressure.
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SteveT
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Post by SteveT on Feb 12, 2016 14:55:55 GMT
I hope to goodness it's never enabled, else Assetz will become the flippers' paradise that Flipping Cr*p always has been and FS has increasingly become since their SM went live.
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shimself
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Post by shimself on Feb 12, 2016 15:01:44 GMT
I hope to goodness it's never enabled, else Assetz will become the flippers' paradise that Flipping Cr*p always has been and FS has increasingly become since their SM went live. I can't see it's done TC FK REBS any harm. For new lenders it's a way of overcoming cash drage and getting diversified quickly, at a cost of course, but still 8% from AC or 0.8% from HSBC?
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bigfoot12
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Post by bigfoot12 on Feb 12, 2016 15:18:29 GMT
I can't see it's done TC ... any harm. TC used to charge over 2.5% on small transactions and now charge 1% which means turnover on TC probably isn't representative (Tobin was right?). Also would you write a bot for TC? In time they will have to allow premiums once we have been through an interest rate or credit cycle, or maybe if rates fall after the introduction of IF ISA or negative rates.
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Post by chris on Feb 12, 2016 15:30:20 GMT
It's coded so the system is ready but internally it's been decided not to enable the feature for the time being. There's little demand for it, there's not a lot of need for it (in our opinion), and there's a desire to protect new lenders from exploitation. All that said we have tasked the legal / compliance teams to make sure that there is a sound basis upon which it could be activated if we chose to do so, and it periodically comes up for discussion as we have ideas of how to tackle the associated problems that its introduction would bring. If we ever come up with a great idea of how it could be implemented to be a net benefit to all lenders then it will make its way on to the platform.
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Post by pepperpot on Feb 12, 2016 15:40:01 GMT
I like AC the way it is, but if premiums are introduced I'd play the game and it would probably be my no.1 play area.
It certainly helps pull in funds which if that ever becomes a problem it's introduction might start to look more attractive - my FS exposure has increased quite a bit in the last couple of months, but premiums weren't the main driver there, the simple ability to sell was enough. It would probably be as beneficial for AC just as it's (effectively) been detrimental to FC in restricting the players with fixed rates (I've never received an email before asking why I've removed funds even though my FC balance has fluctuated wildly in response to opportunities over the last 2yrs). So from a shareholder perspective I'd welcome it, as a lender, not quite as enthusiastic because it's more work keeping track of it all even though it could help bolster my returns.
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Post by mrclondon on Feb 12, 2016 17:02:35 GMT
I hope to goodness it's never enabled, else Assetz will become the flippers' paradise that Flipping Cr*p always has been and FS has increasingly become since their SM went live. I can't see it's done TC FK REBS any harm. For new lenders it's a way of overcoming cash drage and getting diversified quickly, at a cost of course, but still 8% from AC or 0.8% from HSBC? Pure speculation on my part, but GLI Finance's withdrawal from FK could have been due, in part, to the very poor liquidity of the FK secondary market due to almost all parts being marked up with a premium and few lenders bothering to look at it regularly. Auto-buy was introduced to try to counter that, but none of my auto-buy requests at par over the last 18 months have been fulfilled despite GLIF's huge underwriting positions being sat on the other side of the equation at ridiculous mark-ups.
The issue is that since GLIF got involved most FK loans have been written with very thin risk margins ... there simply isn't scope for premiums and still leave an appropriate risk margin for the buyer. To quote your example, most lenders would probably be better off with "0.8% from HSBC".
TC suffers from a major issue that premiums have to be allowed as the only way for the seller to receive rolled-up interest - but sellers of such loans struggle to achieve the necessary mark-up.
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Post by chris on Feb 12, 2016 17:34:16 GMT
mrclondon - good to know some of the background / detail. As I say introducing premiums now wouldn't solve any specific issues for the platform or lenders so it's not something that's going to happen without that changing.
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shimself
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Post by shimself on Feb 12, 2016 20:02:21 GMT
inter alia...
TC suffers from a major issue that premiums have to be allowed as the only way for the seller to receive rolled-up interest - but sellers of such loans struggle to achieve the necessary mark-up.
So everybody put their stuff on the market the day after interest payments were credited.
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bigfoot12
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Post by bigfoot12 on Feb 12, 2016 21:40:23 GMT
inter alia...
TC suffers from a major issue that premiums have to be allowed as the only way for the seller to receive rolled-up interest - but sellers of such loans struggle to achieve the necessary mark-up.
So everybody put their stuff on the market the day after interest payments were credited. is referring to loans that roll up some or all of their interest until maturity.
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wysiati
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Post by wysiati on Feb 13, 2016 4:24:36 GMT
mrclondon - good to know some of the background / detail. As I say introducing premiums now wouldn't solve any specific issues for the platform or lenders so it's not something that's going to happen without that changing. Sorry if this has been covered elsewhere but why is there no option to list loan holdings for sale at a discount of -0.5%? The system only allows listings for sale at par before jumping to -1.0% and then every 0.5% step to -99.5%. If 0.5% is the chosen step size why should holders not be allowed to list at a 0.5% discount? Is this a possible oversight or an AC policy thing? Thanks.
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wysiati
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Post by wysiati on Feb 13, 2016 5:25:13 GMT
I can't see it's done TC FK REBS any harm. For new lenders it's a way of overcoming cash drage and getting diversified quickly, at a cost of course, but still 8% from AC or 0.8% from HSBC? Pure speculation on my part, but GLI Finance's withdrawal from FK could have been due, in part, to the very poor liquidity of the FK secondary market due to almost all parts being marked up with a premium and few lenders bothering to look at it regularly. Auto-buy was introduced to try to counter that, but none of my auto-buy requests at par over the last 18 months have been fulfilled despite GLIF's huge underwriting positions being sat on the other side of the equation at ridiculous mark-ups.
The issue is that since GLIF got involved most FK loans have been written with very thin risk margins ... there simply isn't scope for premiums and still leave an appropriate risk margin for the buyer. To quote your example, most lenders would probably be better off with "0.8% from HSBC".
Re: GLIF/FK I think more fundamentally there have been some bigger picture strategic mis-steps which have led to, or at least contributed to, this situation. Have a look at the RNS releases for GLIF and you will see they were in the brown stuff with a cost of capital which was too high and a need to raise funds/strengthen the balance sheet. The listed investment trust did not appear to attract enough external funding (IIRC only 10-15% by late 4Q2015) and left GLIF with a bigger than anticipated residual holding. In 4Q 2015 GLIF announced a proposed further ZDP share placing and open offer for up to £40m which did not fly and got cancelled with the CEO also departing. There was also a mooted issue of convertible unsecured bonds which did not get shareholder support. It was revealed at the time that the company's existing loan facility was costing 11% at the same time as funds were being used to fill loans at below that level. Following these poorly executed fundraising attempts GLIF is now taking a material injection of funds (capital/cash) from a third party, subject to shareholder approvals. Even so, given the funding constraints, maintaining the level of dividend not covered by cash earnings (div now cut by -50% y/y) has proved incompatible with building a portfolio of strategic investments and pumping funds through those platforms to enhance their value, along with prospective fund commitments. There was an announced strategic review of GLIF's alt-fi platforms with a view to focusing resources on the most attractive/viable and there is the possibility of writedowns on some of those investments. The FK announcement/decision, I would argue, needs to be seen in the context of that background, whatever any spin might suggest. The risks for FK with its over-reliance on a single party were apparent and being discussed on this forum over a year ago, e.g.: p2pindependentforum.com/post/33437/threadYou might wish to move this to a relevant FK thread?
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Post by chris on Feb 13, 2016 7:30:48 GMT
mrclondon - good to know some of the background / detail. As I say introducing premiums now wouldn't solve any specific issues for the platform or lenders so it's not something that's going to happen without that changing. Sorry if this has been covered elsewhere but why is there no option to list loan holdings for sale at a discount of -0.5%? The system only allows listings for sale at par before jumping to -1.0% and then every 0.5% step to -99.5%. If 0.5% is the chosen step size why should holders not be allowed to list at a 0.5% discount? Is this a possible oversight or an AC policy thing? Thanks. It's policy so that people need to offer a certain level of discount rather than just try to game the system. We used to allow much smaller steps and people were (understandably) abusing that to gain advantage in the market. By forcing people to give up at least 1% we felt it would stop that kind of gaming and keep the market more balanced.
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kermie
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Post by kermie on Feb 13, 2016 11:03:12 GMT
The risks for FK with its over-reliance on a single party were apparent and being discussed on this forum over a year ago, e.g.: Presumably AC see the QAA as a means of diversifying it's sources of funding. QAA now over £8M.
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