Author Topic: Platform -> Folio Rotation?  (Read 14880 times)

SarahV

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Re: Platform -> Folio Rotation?
« Reply #15 on: May 25, 2013, 02:26:35 PM »
Eek, if I said 5% it was a typo. Surely I said 3% :) 

ee1x

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Re: Platform -> Folio Rotation?
« Reply #16 on: May 26, 2013, 06:21:48 PM »
This is where the term "high-frequency trading" applies to P2P lending.

I'd say the suggestion is more on par with day trading rather than HFT, considering that HFT typically refers to a timescale of milliseconds or microseconds. It will, however, be quite interesting to see if the secondary p2p market is eventually big enough to sustain HFT in some form.
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core

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Re: Platform -> Folio Rotation?
« Reply #17 on: May 27, 2013, 03:42:47 AM »
I'd say the suggestion is more on par with day trading rather than HFT, considering that HFT typically refers to a timescale of milliseconds or microseconds. It will, however, be quite interesting to see if the secondary p2p market is eventually big enough to sustain HFT in some form.

Neither day trading nor HFT will ever be remotely possible as long as they insist on taking 1-2 business days for settlement.  In order for anything like that to happen you'd have to be able to turn around and sell it before settlement, much like sane markets allow.  I honestly cannot see them doing this, but it sure would make things *much* more interesting.

cjayb

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Re: Platform -> Folio Rotation?
« Reply #18 on: May 28, 2013, 12:36:16 PM »
I'd say the suggestion is more on par with day trading rather than HFT, considering that HFT typically refers to a timescale of milliseconds or microseconds. It will, however, be quite interesting to see if the secondary p2p market is eventually big enough to sustain HFT in some form.

Neither day trading nor HFT will ever be remotely possible as long as they insist on taking 1-2 business days for settlement.  In order for anything like that to happen you'd have to be able to turn around and sell it before settlement, much like sane markets allow.  I honestly cannot see them doing this, but it sure would make things *much* more interesting.

Yeah, I don't know why Folio doesn't allow same day settlement. Would be much better though. Currently my only complaint about LC is the significant cash drag, which when dealing with fixed income investments is an important variable to keep as low as possible.

I would also love to see margin accounts from LC, but I doubt that would ever happen too. Would be great if they had competitive margin rates (6-8%) and you have a strategy that gives you performance above the benchmark. They would pocket some revenue and you would profit on the spread between the margin interest rate and your performance.

Fred

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Re: Platform -> Folio Rotation?
« Reply #19 on: May 28, 2013, 12:57:54 PM »
I would also love to see margin accounts from LC, but I doubt that would ever happen too. Would be great if they had competitive margin rates (6-8%) and you have a strategy that gives you performance above the benchmark. They would pocket some revenue and you would profit on the spread between the margin interest rate and your performance.

WebBank -- LC's back-office bank -- would probably be interested in funding margin accounts for LC investors.

core

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Re: Platform -> Folio Rotation?
« Reply #20 on: May 28, 2013, 01:25:36 PM »
Interesting idea about the margin accounts.   Although for day trading purposes it's not so much the cash drain as it is simply having something to sell.  You can have all the money in the world, but once you buy something you can't trade out of it until day(s) later because it just isn't there yet.  You have nothing to do but sit on your hands and wait, or buy more and wait yet longer.

They wouldn't even necessarily need same-day settlement if there's some legal or technical barrier to doing so.  You could just trade away your pending purchase and it would settle to the next guy.  Or we should be able to trade options on the notes.  Yes, options, that's the ticket.  And create a LendingClub volatility index, futures on that index, options on the futures, oh my.  There would be fun to be had by all.

rawraw

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Re: Re: Platform -> Folio Rotation?
« Reply #21 on: May 28, 2013, 01:31:35 PM »
I would also love to see margin accounts from LC, but I doubt that would ever happen too. Would be great if they had competitive margin rates (6-8%) and you have a strategy that gives you performance above the benchmark. They would pocket some revenue and you would profit on the spread between the margin interest rate and your performance.

WebBank -- LC's back-office bank -- would probably be interested in funding margin accounts for LC investors.
I don't know much about Web bank, but I could see increased regulatory scrutiny if they did that

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Fred

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Re: Platform -> Folio Rotation?
« Reply #22 on: May 28, 2013, 02:16:00 PM »
Per LC Form 10-Q (http://www.sec.gov/Archives/edgar/data/1409970/000119312513222693/d518573d10q.htm):

"The Member Loans are posted on our website pursuant to a program agreement with WebBank, an FDIC-insured, state-chartered industrial bank organized under the laws of the state of Utah, approved loans are funded and issued by WebBank and sold to us after closing."

So technically WebBank is the issuer and funder of the loans, which are then sold to LC.

Not sure what additional regs WebBank will need to face in order to fund margin accounts; however, for the right price (e.g., 8%), funding margin accounts might be worth it.  Banks' costs of funds are very low nowadays, so this is a good spread for them.

If LC/WebBank could facilitate $100M on margin accounts, that would be about $7 - 8M of extra revenue annually.
« Last Edit: May 28, 2013, 02:21:49 PM by Fred »

cjayb

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Re: Platform -> Folio Rotation?
« Reply #23 on: May 28, 2013, 02:40:30 PM »
Per LC Form 10-Q (http://www.sec.gov/Archives/edgar/data/1409970/000119312513222693/d518573d10q.htm):

"The Member Loans are posted on our website pursuant to a program agreement with WebBank, an FDIC-insured, state-chartered industrial bank organized under the laws of the state of Utah, approved loans are funded and issued by WebBank and sold to us after closing."

So technically WebBank is the issuer and funder of the loans, which are then sold to LC.

Not sure what additional regs WebBank will need to face in order to fund margin accounts; however, for the right price (e.g., 8%), funding margin accounts might be worth it.  Banks' costs of funds are very low nowadays, so this is a good spread for them.

If LC/WebBank could facilitate $100M on margin accounts, that would be about $7 - 8M of extra revenue annually.

Iirc under Regulation T only the custodian of your account can allow margin, and that entity also has to be a registered BD, so I don't think Webbank would be able to do that because it doesn't fit either of those requirements.

I also assume that LC isn't registered as a BD and that's why we have to use Folio to buy/sell notes. The margin account would probably have to come from Folio itself because I think that's the only associated entity that is a registered BD. It would also have to take custody of all client assets. Which means Folio would hold all of your securities/cash, and LC would effectively just be a service that underwrites/issues notes.

Not sure how viable it would really be due to how the business is currently structured.

Fred

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Re: Platform -> Folio Rotation?
« Reply #24 on: May 28, 2013, 02:55:47 PM »
Iirc under Regulation T only the custodian of your account can allow margin, and that entity also has to be a registered BD, so I don't think Webbank would be able to do that because it doesn't fit either of those requirements.

I also assume that LC isn't registered as a BD and that's why we have to use Folio to buy/sell notes. The margin account would probably have to come from Folio itself because I think that's the only associated entity that is a registered BD. It would also have to take custody of all client assets. Which means Folio would hold all of your securities/cash, and LC would effectively just be a service that underwrites/issues notes.

Not sure how viable it would really be due to how the business is currently structured.

Sounds about right.   8)

I don't think either LC or WebBank is a registered BD.  WebBank is a "Utah Industrial Bank" (http://www.dfi.utah.gov/whatisIB.htm), which is an interesting concept in itself.

FOLIOfn might be the way to go.  Interesting fact: FOLIOfn was established by an ex-SEC commisioner (http://en.wikipedia.org/wiki/FOLIOfn).