Prosper goes "quiet"

Comment: From Prosper.com website. Additional filing to enable "secondary lending".

Excerpt:

Prosper Filing Registration Statement; Enters Quiet Period

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.

Comment: Hopefully this process will move quickly! I think they are trying to implement their "resale platform". See SEC filing: the Resale Platform

Excerpt:

Resale of the Notes – The Resale Platform


Prior to the date of this prospectus, the Notes have been non-transferable except by assignment to a collection agency upon default. As soon as practicable after the date of this prospectus, Prosper intends to establish a Resale Platform on which the Notes may be resold to other Lenders after three months following the date that the initial Lender acquired the Note from Prosper. After the three-month holding period, if a Lender desires to resell a Note prior to the end of the Note’s term, the selling Lender may post the Note on the Resale Platform for resale in a similar auction format as a Borrower listing. If another Lender purchases the Note, the Note will be transferred through the Resale Platform to the purchasing Lender. Unlike the origination of Loans and the sale of Notes to Lenders through the Platform, a Note sold through the Resale Platform must be purchased in its entirety by a single Lender. Once a Note has been resold through the Resale Platform to a subsequent Lender, the Note may again be resold through the Resale Platform without any required holding period. Except for sales of Notes on the Resale Platform, the Notes will continue to be non-transferable except by assignment to a collection agency upon default.

Notes outstanding prior to the date of this prospectus will become transferable through the Resale Platform as a result of the amendment to the Lender Registration Agreement, effective as of the date of this prospectus. Previously, the Notes were non-transferable except by assignment to a collection agency upon default.

Explanation of "secondary market" here:

The idea is that a lender can sell his investment in a loan to another lender who buys it. It could work similar to trading bonds.

Suppose a lender have invested $100 in a AA loan at 12% interest, it is current and has still 18 month to run. Depending on the assessment of the buyers it could sell for a premium, that means the buyer pays the lender a price above $100 e.g. $102 or it could sell at a discount below $100 e.g. $97.

A premium would occur if buyer demand is strong, assessing that the 12% (and the other loan specifics) are an above average market deal. A discount could occur if the loan is assessed by the buyers as below average (on interest rate or other loan specifics) or if the risk for default is impacting (e.g. the loan is already late).