I received an email last night from Lending Club announcing some changes to their trading platform. The trading platform, run by FOILIOfn, is where investors can buy and sell notes that have already been issued.
There are three main changes that are being implemented on Lending Club’s trading platform starting today:
- Charged Off and Defaulted Notes can no longer be listed for sale – this one is a no brainer. Investors should never have been allowed to list defaulted notes for sale in the first place.
- Listings will automatically expire 7 calendar days after they are listed – this is the change that I expect will have the most impact on investors. Some notes that I have listed for sale on the trading platform have taken two or three weeks to sell. Now, I will have to go in and re-list them after seven days.
- Markup premiums will be capped at 70% – to this one I say, “About time!” For years now the trading platform has been littered with notes that were priced in a ridiculous way. Just this week I was in there and I saw a note that had one payment left, the total outstanding was less than $1, and the note was priced at $25. No one would ever buy that note so it was just cluttering up the system.
Like any change I imagine there will be some people that disapprove. But from a note buyer’s perspective these are all positive changes. Let’s face it, if we want a vibrant trading platform it needs to be easy to use from both a buyer’s and a seller’s perspective. In the past I think the platform has skewed towards being better for sellers than buyers, these changes will make it a little more equitable.
However, I think there is a long way to go before the trading platform is as easy to use for buyers of notes as it is for investors on the retail platform. The trading platform is in dire need of some better filtering so investors can more easily find the notes that interest them. There was no mention of that in today’s changes. But there was this little tidbit at the end of Lending Club’s email that I found interesting:
These changes are part of a larger, multi-month, project to improve the features and usability of the Note Trading Platform.
It seems that the trading platform is getting an overhaul, which is great news for all peer to peer lending investors. Maybe we will see some better filtering options in the future.