ped
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Post by ped on Jul 10, 2016 15:45:07 GMT
The reason you can't buy the loans you want on the SM is because we are all after them.  |
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david42
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Post by david42 on Jul 10, 2016 16:05:17 GMT
The reason you can't buy the loans you want on the SM is because we are all after them. Improved platform software cannot remove that problem but it can lessen the impact of that problem on lenders by: - reducing the time wasted fruitlessly trying to buy non-available loans. - avoiding the need to keep an idle cash buffer or gamble on resolving INPL loans in time.
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littleoldlady
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Post by littleoldlady on Jul 10, 2016 17:09:26 GMT
If it was implemented by using this forum to arrange a buy/sell time then it would be restricted to users of this forum, probably insufficient number.
If it was implemented on the platform then you would have the problem of relative desirability of loans.
The same end result could be achieved by introducing variable pricing on the SM, but I see no great advantage to SS to justify the IT cost. If they ever do consider this I hope they study the attempts by FS and ABL and avoid the mistakes they made.
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boble
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Post by boble on Jul 11, 2016 10:08:58 GMT
As others have said, I can't see the value of this - to SS or too lenders who can buy sell on the SM as now. It would add unneeded complexity to the site - and even if the FCA didn't object using such a system would be against the ISA rules which I presume meeting is a higher priority for SS. The value to SS is that some lenders would be able to increase their lending if they could reduce the risk by spreading their loans more evenly. The value to lenders arises because we cannot buy and sell on the SM right now. Today I have been monitoring the SM all day and have managed to make only two trades in the loans I want totalling less than 1% of my unfilled targets. The SM is always either in feast or famine, so trying to diversify with the current SM is always a challenge. It also requires either keeping a cash buffer that is not earning or using INPL and hoping to sell loans before SS take umbrage. It is also prohibitively time consuming. I can see no reason for the FCA to object or for a problem with the ISA rules if SS added a loan swapping market. Swaps at arms length through an open market should present a level playing field. The additional complexity should be minimised by careful design of the user interface so that it would effectively be hidden from users who just wanted to buy or sell loans. david42 I completely agree with you, however, it would seem that we are very much in the minority. Perhaps some of the Bad Idea voters would like to explain their reasoning.
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littleoldlady
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Post by littleoldlady on Jul 11, 2016 10:52:40 GMT
david42 I completely agree with you, however, it would seem that we are very much in the minority. Perhaps some of the Bad Idea voters would like to explain their reasoning. On the SM you can easily sell desirable loans or buy undesirable loans. The proposed system would likely result in people wanting to swap undesirable loans for desirable loans and, surprise, finding no takers. Variable pricing is the only way to achieve what you want but beware of the pitfalls.
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sl75
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Post by sl75 on Jul 11, 2016 12:25:55 GMT
Also think it's essentially a bad idea.
Suppose you're holding loan A and want loan B. There are 4 possibilities:
1. Loan A and loan B are both readily available on the SM.
Action: join the back of the queue to sell loan A, and when the sale completes (or seems certain to complete within the 48 hour INPL limit) buy loan B.
2. Loan A and loan B are both difficult to buy on the SM.
Action: keep trying to buy loan B, and when you're successful, resolve the negative balance by selling loan A (which will occur "almost instantly", because it's also difficult to buy).
Note: this is a case where a "swap" can be potentially useful, but it's unclear why the platform should favour "swappers" over those who are investing fresh cash into the platform in order to buy loan B...?
3. Loan A is scarce, and loan B is readily available
Action: whichever order you prefer, sell loan A and buy loan B.
4. Loan A is readily available, loan B is scarce
Action: well, you're a bit stuck - even if "swaps" are introduced, there's no reason for anyone to be using the swap facility in the other direction, as they can readily perform the swap as per case 3.
For those saying they'd add more money if they could swap loans... that seems highly illogical - if you're looking to add money, you just buy loan B and resolve the negative balance with cash rather than by selling/swapping another loan.
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david42
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Post by david42 on Jul 11, 2016 16:50:09 GMT
sl75 , thank you for your summary of the four possible swap trades. We agree that a swap market is most relevant for case 2. 2. Loan A and loan B are both difficult to buy on the SM. Action: keep trying to buy loan B, and when you're successful, resolve the negative balance by selling loan A (which will occur "almost instantly", because it's also difficult to buy). Note: this is a case where a "swap" can be potentially useful, but it's unclear why the platform should favour "swappers" over those who are investing fresh cash into the platform in order to buy loan B...? With the current secondary market the swap can only take place if someone wants to sell loan B - a rare event. But a swap market would allow this transaction to take place even when no one wants to sell the scarce loan B but they are prepared to swap it for a different scarce loan. This opens up a whole new set of balancing transactions that cannot currently take place. The platform does not need to favour swappers over those who are investing fresh cash. The number of people selling scarce loans for cash is not reduced just because non cash loan swaps are taking place. For example, I would like more of scarce loans PBL100, PBL101, and PBL102; I would be prepared to swap these for other scarce loans, including DFL002, PBL092, PBL093. By waiting for people who are prepared to sell these loans for cash, I still have 95% of this transaction incomplete after spending many hours sitting at a terminal. The majority of lenders will have imbalances within their holding of scarce loans and they could reduce their maximum risk by diversifying more evenly across those loans. The benefit to Saving Stream is that my investment is limited by the maximum I am prepared to risk against each loan so improving diversity across loans will mean I put more of my P2P money on Saving Stream. As the voting shows that only two other lenders have seen the light I will retreat gracefully and shut up.
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adrianc
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Post by adrianc on Jul 11, 2016 19:57:24 GMT
With the current secondary market the swap can only take place if someone wants to sell loan B - a rare event. But a swap market would allow this transaction to take place even when no one wants to sell the scarce loan B but they are prepared to swap it for a different scarce loan. This opens up a whole new set of balancing transactions that cannot currently take place. If the person wanting Loan A spots it on the SM, they can buy it quickly, then list Loan B - which will sell in seconds flat.
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boble
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Post by boble on Jul 13, 2016 20:58:41 GMT
sl75 , thank you for your summary of the four possible swap trades. We agree that a swap market is most relevant for case 2. 2. Loan A and loan B are both difficult to buy on the SM. Action: keep trying to buy loan B, and when you're successful, resolve the negative balance by selling loan A (which will occur "almost instantly", because it's also difficult to buy). Note: this is a case where a "swap" can be potentially useful, but it's unclear why the platform should favour "swappers" over those who are investing fresh cash into the platform in order to buy loan B...? With the current secondary market the swap can only take place if someone wants to sell loan B - a rare event. But a swap market would allow this transaction to take place even when no one wants to sell the scarce loan B but they are prepared to swap it for a different scarce loan. This opens up a whole new set of balancing transactions that cannot currently take place. The platform does not need to favour swappers over those who are investing fresh cash. The number of people selling scarce loans for cash is not reduced just because non cash loan swaps are taking place. For example, I would like more of scarce loans PBL100, PBL101, and PBL102; I would be prepared to swap these for other scarce loans, including DFL002, PBL092, PBL093. By waiting for people who are prepared to sell these loans for cash, I still have 95% of this transaction incomplete after spending many hours sitting at a terminal. The majority of lenders will have imbalances within their holding of scarce loans and they could reduce their maximum risk by diversifying more evenly across those loans. The benefit to Saving Stream is that my investment is limited by the maximum I am prepared to risk against each loan so improving diversity across loans will mean I put more of my P2P money on Saving Stream. As the voting shows that only two other lenders have seen the light I will retreat gracefully and shut up. To try and illustrate the point that david42 is attempting to make; I have a large amount of PBL107 to sell (I sold £1,500 on the SM today and wont be releasing any more until i am able to buy some of what I want), however, I wish to buy some PBL108, PBL120, PBL119, PBL115, PBL112, PBL113 and DFL003. Would anyone like to do some swaps with me?
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adrianc
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Post by adrianc on Jul 13, 2016 21:05:10 GMT
To try and illustrate the point that David42 is attempting to make; I have a large amount of PBL107 to sell (I sold £1,500 on the SM today and wont be releasing any more until i am able to buy some of what I want), however, I wish to buy some PBL108, PBL120, PBL119, PBL115, PBL112, PBL113 and DFL003. Would anyone like to do some swaps with me? No, thanks. But I've got some farmland and DFL004 for 119, 98, 99, 101, 102. Anybody?
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boble
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Post by boble on Jul 13, 2016 21:54:01 GMT
To try and illustrate the point that David42 is attempting to make; I have a large amount of PBL107 to sell (I sold £1,500 on the SM today and wont be releasing any more until i am able to buy some of what I want), however, I wish to buy some PBL108, PBL120, PBL119, PBL115, PBL112, PBL113 and DFL003. Would anyone like to do some swaps with me? No, thanks. But I've got some farmland and DFL004 for 119, 98, 99, 101, 102. Anybody? Great!! Assuming some investors are interested, how would we make the swaps happen?
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adrianc
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Post by adrianc on Jul 13, 2016 21:57:50 GMT
You meet at a quiet time of night in a deserted SM, exchange a secret signal by listing a 1p part, then wait for the swapper to get his captcha lined up, and - bingo...
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Liz
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Post by Liz on Jul 13, 2016 22:30:17 GMT
You meet at a quiet time of night in a deserted SM, exchange a secret signal by listing a 1p part, then wait for the swapper to get his captcha lined up, and - bingo... This thread sounds more like wife swaping 
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adrianc
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Post by adrianc on Jul 14, 2016 6:39:03 GMT
You meet at a quiet time of night in a deserted SM, exchange a secret signal by listing a 1p part, then wait for the swapper to get his captcha lined up, and - bingo... This thread sounds more like wife swaping I shall bow to your expertise.
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