Funding Circle upgrades secondary market

By Daniel Lanyon on Thursday 31 October 2019

Alternative Lending

The marketplace lending platform, which focuses on the SME lending market, will be hoping to improve liquidity for investors wanting to exit loan assets swiftly.

Funding Circle upgrades secondary market
Image source: Funding Circle

Funding Circle will launch a major overhaul of its secondary market in a bid to improve investor liquidity, with the new regime set to go live in December.

The marketplace lending platform will move away from a ‘first come first served’ approach. The new system will instead cycle round all investors wishing to sell loans as many times as possible within a 120 day period, subject to liquidity. 

Funding Circle will also introduce a transfer payment, which will go to the buyer of the loan part, not Funding Circle. 

"When a loan part is sold, a 1.25 per cent transfer payment will be applied. For example, where a seller sells a £20 loan part, they would receive £19.75 from the buyer (as with the current tool, you would also receive any interest owed on that loan part since the last monthly repayment)," Funding Circle said in a blog post. 

AltFi understands this is aimed at boosting returns for all investors and attracting new funds to the platform. 

Recent reports have suggested that some investors have been waiting up to 124 days to sell loans. 

The new regime will begin on 2nd December when all investors currently selling loans will be automatically transferred over. 

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