LendingClub (NYSE:LC), a digital bank and online lender, has improved its trading system for personal loans. According to a statement from the company it has extended the capabilities of its electronic trading platform named LCX to include LCX Link. This is designed to open access and removes friction for institutional investors, allowing them to automatically purchase, sell and settle loan transactions through LCX.
LendingClub says this replaces the largely manual process with a digital trading platform. The technology allows for variable loan sale pricing, which includes the ability to sell new loans above par. There is an automated auction mechanism where investors may bid for and purchase a selection of loans from LendingClub. Previously LCX was only available through an API, but with LCX Link, banks and other institutional investors can connect and purchase loans.
LendingClub expects to expand LCX in Q4 2021 to enable client-to-client portfolio sales through its secondary market, a move that should improve liquidity.
Clarke Roberts, VP of Marketplace Services at LendingClub, says:
“We continue to leverage technology to grow our marketplace, and LCX Link is a key capability that has helped bring in multiple investors who are pleased with the speed at which we’re innovating to increase access to this asset class. The efficiency we’re enabling combined with our scale increases accessibility and enhances transparency for investors, which ultimately drives new and more competitive products for our members.”
In 2020, LendingClub announced its intent to end its program that allowed retail investors to invest in loans. It is not immediately clear if LendingClub will leverage the new technology further to once again allow individuals, either accredited or not, to participate in the marketplace.
LendingClub says it expects to execute $2 billion in total loan sales through LCX by the end of Q3 2021.