ianj
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Post by ianj on Mar 30, 2016 12:34:39 GMT
Scenario : If I buy £1000 of loan from SM with currently £1M available of the same loan on SM, don't pay SS for the £1000 and put it on sale instantly. Waiting for my part to be sold and just earning interest on it. It's not quite as you appear to believe from your example 'scenario'. Any purchases not settled within the 48 hr limit will be nullified and zero interest paid for the time held.
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Post by Deleted on Mar 30, 2016 12:37:40 GMT
Scenario : If I buy £1000 of loan from SM with currently £1M available of the same loan on SM, don't pay SS for the £1000 and put it on sale instantly. Waiting for my part to be sold and just earning interest on it. It's not quite as you appear to believe from your example 'scenario'. Any purchases not settled within the 48 hr limit will be nullified and zero interest paid for the time held. That certainly is true when buying from underwriters/SS, but how will that be implemented for individual buyer/seller. Suppose I buy a part of loan from you and fail to pay SS (fund my account) within 48 hours, will that be now cancelled with SS owning it or will the original seller own it again? (sorry if it has been answered in FAQ)
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ben
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Post by ben on Mar 30, 2016 12:41:40 GMT
If SS did this a lot of the big hitters would just clog the secondary market up with massive chunks of the loans they are not to bothered if sell or not and make it impossible for others to sell who actually need to, for example a loan ending in a two months they might decide to dump £100,000 on secondary market a) to get rid of risk and b) to reinvest those funds into something newer and it will cost them nothing
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Post by mrclondon on Mar 30, 2016 12:55:15 GMT
Another voice advising caution on interest on for sale parts. AC can get away with it as the buy algorithm provides for a value weighted (AIUI) round robin match with multiple sellers not a FIFO queue. MT has not had until recently persistent queues on the SM, but its noticeable that there are significant sums available against the 2 supercar loans that are due to redeem in the next 3 weeks. The SM on FS is a disaster for a number of reasons but probably not relevant as it (and FC, FK, FE etc) list individual loan parts for sale not a queue against a loan. In short, savingstream , there is no directly comparable model to what you are suggesting - hence caution advised.
EDIT: As others are suggesting the net result is almost certainly going to be a clogged up SM, which would then require the ability to offer discounts to allow sellers to exit quicker than the queue turnover.
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ianj
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Post by ianj on Mar 30, 2016 12:58:26 GMT
It's not quite as you appear to believe from your example 'scenario'. Any purchases not settled within the 48 hr limit will be nullified and zero interest paid for the time held. That certainly is true when buying from underwriters/SS, but how will that be implemented for individual buyer/seller. Suppose I buy a part of loan from you and fail to pay SS (fund my account) within 48 hours, will that be now cancelled with SS owning it or will the original seller own it again? (sorry if it has been answered in FAQ) Bearing in mind that in SS there is no distinction between primary & secondary markets (SS/underwriter sales & lender resale), I see no way of knowing the origin of anything purchased ** (EDIT: apart from through pre-funding). ** There is certainly no indication in the message received following a successful purchase, which requests accounts are balanced within the 48 hrs grace period.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 30, 2016 13:01:37 GMT
savingstream I assume there will be an official email communication of this change to paying interest (should it occur) including a start date and an update to the relevant T&C (10.3). Otherwise, people might assume its in place when it isnt.
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sam i am
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Post by sam i am on Mar 30, 2016 13:18:09 GMT
The interest currently goes into the Provision Fund...
I don't understand this statement. The provision fund is stated to have a "minimum balance of 2% of the total live loan amount at any time" (see the How It Works page). The figures given on that page show that the provision fund is currently standing at exactly 2%. No more, no less. There is no additional amount representing the interest not paid on loans for sale. What happens if savingstream now pay interest on loans for sale? Will the PF reduce to less than 2%? Or is there an additional element to the PF that SS don't tell us about? Or is it that SS likes to think that the interest lost on selling loans notionally supports the PF? I suspect it's the latter. If paying interest on loans for sale will reduce the PF below 2% (which I very much doubt), then this should be made very clear.
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freddy
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Post by freddy on Mar 30, 2016 13:46:12 GMT
I would like to suggest that rather than pay the interest on loan parts for sale that the interest be paid into the provision fund over and above the 2% of total loan book and remain there. It concerns me that the provision fund only maintains at 2% and this approach, over time, would see it grow. At some point we will see larger loans default and the 2% PF isn't going to cut it. IMHO this would be a good way to provide all investors with a little more protection.
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Monetus
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Post by Monetus on Mar 30, 2016 13:52:07 GMT
I would like to suggest that rather than pay the interest on loan parts for sale that the interest be paid into the provision fund over and above the 2% of total loan book and remain there. It concerns me that the provision fund only maintains at 2% and this approach, over time, would see it grow. At some point we will see larger loans default and the 2% PF isn't going to cut it. IMHO this would be a good way to provide all investors with a little more protection. I also like this suggestion. A bigger Provision Fund would be a smart move and add robustness to the platform.
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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 Mar 30, 2016 14:13:09 GMT
savingstreamThe problem appears to be BH's clogging the SM with large sales thereby preventing smaller investors selling their units. I propose that a 'max sell limit' of £1000 be introduced in any individual loan. BH's would have to wait until their sale completed, before putting another £1,000 up for sale. The process could be automated so that the BH wouldn't need to keep making manual sales. So if a lender put £20,000 up for sale it would only sell that £20,000 in blocks of £1000, thus allowing other lenders into the queue.
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Investor
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Post by Investor on Mar 30, 2016 14:19:37 GMT
savingstream The problem appears to be BH's clogging the SM with large sales thereby preventing smaller investors selling their units. I propose that a 'max sell limit' of £1000 be introduced in any individual loan. BH's would have to wait until their sale completed, before putting another £1,000 up for sale. The process could be automated so that the BH wouldn't need to keep making manual sales. So if a lender put £20,000 up for sale it would only sell that £20,000 in blocks of £1000, thus allowing other lenders into the queue. Great idea, let's see how many more BH's we can get to disappear off to other platforms or reduce their holdings on SS, that's what we need. So your plan is that some investors can sell 100% of their stake in a loan at any time and others can only sell 1%. That sounds fair. BH's are already scaling back as seen by the total investment figures, let's not make it any worse.
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ablender
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Post by ablender on Mar 30, 2016 14:42:32 GMT
savingstream The problem appears to be BH's clogging the SM with large sales thereby preventing smaller investors selling their units. I propose that a 'max sell limit' of £1000 be introduced in any individual loan. BH's would have to wait until their sale completed, before putting another £1,000 up for sale. The process could be automated so that the BH wouldn't need to keep making manual sales. So if a lender put £20,000 up for sale it would only sell that £20,000 in blocks of £1000, thus allowing other lenders into the queue. I understand that there can be some big hitters that can clog the SM to the detriment of others but I do not think that such a limit is fair. Someone who needs to liquidate their holding in a particular loan should have access to a free market. After all, savingstream have mentioned a number of times that the main purpose of the SM is to allow people a way out rather than diversification. This proposal hits directly at the heart of that purpose.
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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 Mar 30, 2016 14:57:37 GMT
savingstream The problem appears to be BH's clogging the SM with large sales thereby preventing smaller investors selling their units. I propose that a 'max sell limit' of £1000 be introduced in any individual loan. BH's would have to wait until their sale completed, before putting another £1,000 up for sale. The process could be automated so that the BH wouldn't need to keep making manual sales. So if a lender put £20,000 up for sale it would only sell that £20,000 in blocks of £1000, thus allowing other lenders into the queue. Great idea, let's see how many more BH's we can get to disappear off to other platforms or reduce their holdings on SS, that's what we need. So your plan is that some investors can sell 100% of their stake in a loan at any time and others can only sell 1%. That sounds fair. BH's are already scaling back as seen by the total investment figures, let's not make it any worse. It's currently a catch-22 scenario. Lenders are less inclined to buy illiquid loans. When I see several hundred thousand available, I am reluctant to buy any, because they are illiquid, therefore it stays illiquid. My suggestion would reduce that perception, making it easier for BH's to sell down.
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treeman
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Post by treeman on Mar 30, 2016 15:05:08 GMT
I would welcome and support the ability to cancel a part/whole loan part sale.
Queue info pre-listing would be welcome too.
I too would be concerned that paying interest on sale parts would clog the SM with 'chuck it up, leave it up-see what happens' listings which could kill liquidity to a great extent.
TBH, I'd prefer the spare bit of interest to go to the PF.
Thinking out loud - Maybe introducing some degree of 'hassle' to the process would limit the listing to 'serious' sellers ?
Perhaps a minimum listing period (24/48hrs ?) before a cancel is enabled could prevent this ? Or an auto de-listing after a period of time - say 7/14 days ?
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ablender
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Post by ablender on Mar 30, 2016 15:17:00 GMT
What about an expiration? A loan is listed for x days and then it is taken off the SM. If someone wants to resist they will go to the end of the queue. In that way there will be some recycling of people wanting to sell. If x days is not too long this can suite many. x days can vary with smaller parts given longer time to sell. Therefor larger sales will be discouraged and left only for when really needed. Comments?
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