Fractional share

Does anyone know when BUX Zero will begin working with fractional shares? I know that there is talks about implementing it but does anyone know when?

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Hey Milan! There’s no release date for fractional trading yet. Once we’ve got more information about this, we’ll let you know.

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Yeah this is really one of the more important features that are still lacking. Certainly in this over valued market where a lot of stocks trade at hefty prices.

It would also enable people to build up positions in more expensive stocks slowly.

Fractional shares are definitely an interesting concept! I do, however, see some limitations/complications to this concept as well. For example in cases where dividend is not a round number and needs to be divided equally. But I can also see this concept becoming complicated when stock splits or reverse stock splits are executed. Now, I don’t really see it happening that a company with an expensive stock will execute a reverse stock split, but anything is possible. I’m curious what would happen to the fractional shares in such a case.

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There really are no limitations, just look at the US broker M1. Fractional shares work fine with dividends and also stock splits.

Should a company do a reverse stock split it will most likely be very simple: You get new fractional shares, just less of them.
When M1 buys a share, behind the scenes it’s split in X-thousand parts, the fractions, and they are bought by users.

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I completely agree with you. I’m not saying it’s not possible, I just think there are some minor details to the concept that make it an obfuscated scheme. For example with dividends, you can’t divide 1 cent between two people. As such, it’s possible that with an uneven dividend payout, the remaining cent will go to the broker itself. I know it sounds like an inferior limitation, but when you contractually own an X-percentage of a stock, you’re also entitled to an X-percentage of the dividend. What I’m saying is: if dividend can’t be divided equally between the fraction holders, there’d need to be a clause that says that the remaining cent will go to the broker instead.

Moreover, if you’d like to file for a tax return in another country at the end of the year, I think you can’t do it for the dividend paid out for fractional shares. You’re not the rightful owner of the initial share. The broker is.

Also, and this is hypothetically speaking, if a reverse split is executed, but the broker owns (for the sake of this example) 3 shares and a 2 for 1 is executed, the broker will be left with 1 share and some cash. As a consequence, fraction holders are left with the same: less fractions and in return they get some cash. You have no say in it. Whereas when you own the 3 shares yourself, you could decide to buy a 4th share to make it an even 2 shares after the split and not be left with some cash.

Another example is voting rights. As a shareholder you have voting rights in shareholder meetings. Fraction holders are not the rightful owners, yet they only have a contractual agreement with a broker. As such, they have no voting rights in shareholder meetings.

I agree it’s all possible and maybe I’m just overthinking this, but I guess I’m not a big fan of such schemes :slightly_smiling_face:. I’d much rather own the real deal than get involved in obfuscated contracts with a broker.

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Well you have some good points for sure!

The dividend, it could be rounded up or down by the broker and then looking at all your (fractional) stocks paying dividend over the year or per month, I’m sure some better result could be come up with than having to divide 1 cent.

As for tax return, I do not know but I’ve had accounts with other Dutch financial insitutions and there I’d own part of a share in a fund, say for example 3.456 shares in “Entity X” fund and there were never issues with tax returns.

As for the reverse split, the broker in your example would end up with 1 share and some cash BUT that broker would buy a new share with that cash + cash of it’s own, and simply hand out the new fractions.
That partial share the broker is left with will surely be sold up in the near (future).

Voting rights I honestly don’t know, have never used them.

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Hi,

is there any progress regading this matter?

What I know is that BUX is ready to do it. But they are waiting for permission. AFM is taking some time to approve it.

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Thanks @DaveyV19!

Would be great if BUX could keep us here in the loop.

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