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I was reading this question over here Why do stock exchanges have minimum share price requirements?

And that got me thinking about why there isn't a maximum share price on stock exchanges?

Or are there some exchanges where there is a max share price?

I mean I get the whole "to the moon" idea. And certainly why a company might want to have a very high share price. But since shares can be split indefinitely I'm just wondering wouldn't it behoove the exchange and brokers to have more tradeable securities. After all they make their money on activity.

Things like BRK.A at $420,000 a share or even AMZN at $3600 are less liquid than say something like AAPL at $148.

Is there a rationale why an exchange wouldn't impose a cap above which you must split?

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    So with regards to fractional shares. That is kind of the point of the question, why do we even need fractional shares? I.e. a share is just a fraction of a company. It just seems like an unnecessary step to have a fraction of a fraction. Plus fractional shares generally cannot be moved to a new broker. It seems inefficient, and a problem that doesn't need to exist. Jul 23 at 18:51
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    While a brokerage might like lower share prices, your question is about Exchanges. You need to give a justification as to why Exchanges should mandate stock splits.
    – RonJohn
    Jul 23 at 18:55
  • I thought that was in the question. "After all they make their money on activity" Because it would mean that stocks are more liquid, which would mean more transactions and exchanges make money on transaction fees which is where exchanges make the majority of their money. So more money is the justification, I assume they like more money. Jul 23 at 19:05
  • "Exchange A forces me to split my stock at a certain level; Exchange B does not. I wonder which exchange I would rather list my stock on."
    – chepner
    Jul 23 at 19:43
  • @chepner I was thinking that as well but that assumes that all exchanges are equal in every other way. From that POV it is just like any value proposition with any business. Does the value proposition offered by the business outweigh the cost plus any limitation of having to abide by their rules. It's no different than how companies select listing exchanges currently. Or why companies advertise on FB or list items for sale on Amazon. Even if you don't like some rules of the platform there is enough value in the platform to use it anyway. Jul 23 at 19:54
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Decades ago most transactions involved buying shares in lots of 100 shares. A high price could block some investors.

Then things progressed. Many people own shares through their mutual fund or ETF. This can be through a taxable account or a retirement account. A large fund doesn't have any issues with high share prices.

Now many brokers are allowing investors to buy a fraction of a share. The price of an individual share doesn't make a difference.

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  • The broker still has to buy an entire share on behalf of its customers.
    – user253751
    Jul 27 at 10:34
  • but that one share can then be split among many customers. Jul 27 at 10:53
  • It's a problem if someone wants to buy 0.00001 shares of Berkshire Hathaway stock, for $4.20, and the broker is on the hook for the remaining $419,995.80.
    – user253751
    Jul 27 at 11:21
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A high share price discourages trading. A classic example of this is Warren Buffett who has never allowed a stock split of Berkshire Hathaway class A shares because he wants to attract long-term investors for that stock. He has allowed the B shares to split because he wants an affordable class of Berkshire shares available for smaller investors.

In reality, your question isn't really very relevant for two reasons. First, most major discount brokers in the U.S. now charge no commissions so a lower share price offers them no additional benefit ("more tradeable securities"). Secondly, many brokers now offer the ability to buy fractional shares so a stock with a high share price is no longer a prohibitive barrier.

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