Timeline for Why can I not buy fractional stock, but see fractional amounts vested?
Current License: CC BY-SA 4.0
10 events
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| Dec 3, 2022 at 5:52 | comment | added | Rohit Pandey | Makes sense. But I'm not sure why you pay them handling fees. Fidelity and all other online brokers removed all fees last year. | |
| Dec 3, 2022 at 5:35 | comment | added | jwenting | @RohitPandey e.g. my investment account works on amount of money put in and taken out, not number of shares. So I tell the broker to invest $1000 in fund X, they get me the number of shares associated with that at current rates (minus handling fees of course). They don't buy fractional shares, but split the proceeds (and losses) of owning full shares among multiple accounts. | |
| Dec 2, 2022 at 22:21 | comment | added | SnakeDoc | @chepner That's how it still works today. You are buying shares from your broker, who has bought lots of shares for it's customers. Very few people/orgs actually buy directly from exchanges. | |
| Dec 2, 2022 at 19:07 | comment | added | user71659 | @RohitPandey Usually "normal" stock splits don't cause an issue because they almost always are in integer ratios, that is one share becomes two or three. Rarely, you can have a non-integer stock split (3-for-2), but the issue comes in reverse splits (e.g. 5 shares become 1). In both cases, if the broker doesn't support fractional shares, then cash for the fractional share is issued instead. | |
| Dec 2, 2022 at 18:18 | comment | added | chepner | That has nothing to do with the issue of fractional shares; it just means prices were quoted in 8ths of a dollar. IIRC, historically, you couldn't even buy single shares, let alone fractions of a share. You could only buy shares in lots of 100, unless your broker let multiple customers pool together to buy a lot. (That's also how I understand the ability to "buy" fractions of a share today.) | |
| Dec 2, 2022 at 15:32 | comment | added | Jacob Krall |
@JustinCave if you look back slightly more than 20 years, i.e. before April 9, 2001, everybody offered fractions … in the price! $5 1/8 was a possible share price on the NYSE for dozens of decades, but $5.13 was not.
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| Dec 1, 2022 at 23:49 | comment | added | Justin Cave | @RohitPandey - If you look back, say, 20 years, no one offered fractional shares. It is only relatively recently that brokers have added support for that to their systems. And not everyone has gone to the expense of doing so (which may be quite costly depending on exactly how much legacy code needs to be updated to expect non-integer values). | |
| Dec 1, 2022 at 23:20 | comment | added | Rohit Pandey | Thanks! Didn't know it was a broker specific constraint. Curious why some brokers don't allow it. And if it were universally applicable, I guess stock splits wouldn't make sense? | |
| Dec 1, 2022 at 23:19 | vote | accept | Rohit Pandey | ||
| Dec 1, 2022 at 21:47 | history | answered | Justin Cave | CC BY-SA 4.0 |