The decision to disable the option to sell loans with premium comes from the following considerations, which we want to share.
In the last days we had a few cases, where an investor bought innatentivelly or by mistake, loans from the secondary market with up to 30% mark up. This investors did not understand he was buying those loans at an extra cost. The loans were sold by other investors, who were trying to make a quick profit, counting on inattentive buyers.
We did not build this functionality with the intention to create opportunity for quick profit or a trading environment for arbitrage and short term gains like a stock market. It's sole purpose was to help investors sell their portfolio before its term in case of liquidity.
If an investor wants to exit, he can sell all loans with good payment history (they should be with a KIP equal to zero) without premium or discount and sell the very small fraction of loans with problems at a discount (we recommend selling at discount equal the KIP value).
The first batch of loans would go on the primary market and the second batch on the secondary market. This works well and has already been used by one of the investors on our platform who needed liquidity.
We built the selling functionality with the possibility to put a premium, because it makes sense to have such option when the interest rates of the market have decreased.
Selling a good loan, that will provide an expected net return of 6% while the new loans are issued with a lower expected net return, is logical to be done with a premium.
Since at the moment there is no change regarding the market conditions, the possibility to sell with a premium is not really necessary.
This is why we decided to put a maximum of 0% for premium when selling to avoid such kind of quick profit opportunities, we don't want to nurture.
If market conditions change, we will adjust this parameter back, to enable selling with a premium, because it will be economically logical.
Apart from this change, we made a few changes in the wording on the secondary market, in order to be absolutelly clear about the meaning.
An investor who wants to sell a loan will see the option for that worded as Premium. But when an investor wants to buy a loan, that is sold as Premium, it will be worded as Extra Cost to underline the fact that you are buying something with a mark up.