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As retail traders continue to exert their influence on the markets, the brokerage landscape is turning ever more competitive. In some ways, what were seeing is an accessibility arms race, where the offering of exchange-traded securities and derivatives is increasingly being tailored to beginners and smaller investors.

The idea is to make access to these products cheaper, easier, and thus to allow investors from all walks of life to gain exposure to these markets. Zero commissions were previously one of the frontiers of the battle between retail trading venues, however, today fractional and notional trading is very much the front line.Obstacles to Small Investors

The indivisibility of shares has always been a stubborn barrier to entry for retail traders, and its becoming more so as the stock prices of mega-companies that are most popular among them continue to rise.

Currently, a share of Tesla stock is trading for just under $197, while Meta shares are going for $174, and Apple for $151. Without the ability to allocate fractional amounts, the above prices represent the minimum investment amount of 1 share for someone seeking exposure to any of these names.

This is problematic as it places diversification out of the reach of smaller investors who cant afford to purchase a selection of different names outright. This is exacerbated by the fact that these securities become even more inaccessible during bull markets, precisely when interest in share-buying tends to peak. Tesla stock reached a high of over $400 in November of 2021, Meta over $380, and Apple over $180.

The ability to invest fractional amounts in an affordable manner solves the above issue. It levels the playing field by allowing a far wider base of investors to gain a share in the wealth created by these and other iconic companies. For example, a broker offering shares in 0.1 increments can allow someone to purchase a tenth of a share in each of the above companies for just over $50 ($19.70 + $17.40 + $15.10 = $52.20).

This enables an investor to allocate a small amount to each company every month, or in the case of notional trading, they can dollar-cost average into their chosen names on a monthly basis by just splitting that $50 equally between each stock. This is why fractional shares are such a big deal. Theyre the single most important thing brokers can do to catalyze the growing interest in investing among the general public, as well as encouraging new demographics to start participating in these markets.Fractional Order Routing

As with all things, the devil in the details. The way in which fractional shares offerings are implemented by brokers directly translates to how competitive they can be, as well as to what degree they can appeal to investor preferences.

A common approach to supporting fractional trading is known as route as received. In this model, when a broker receives a fractional order, they simply route it directly to the counterparty and everything is handled on their end. This is the simplest approach as it means that the brokerage doesnt have to concern itself with any of the technological and risk management logistics involved in holding and managing fractional inventories.

On the other hand, it means that the brokerage can only implement fractional trades on the assets offered by its executing venue, which can be limited. Theres also the issue of fees to consider, which can make the trading of fractional shares less favorable when the end client is investing small amounts. Both of the above mean that brokers offering fractional trades on a wider selection of names, and at more affordable prices, will enjoy a competitive advantage in an already highly competitive segment.Internal Fractional Inventory

The other approach is for the broker to manage their own fractional inventory internally. In this model, the broker keeps a small inventory of shares on its books for the purposes of netting-off incoming fractional orders.

A fractional rounding algorithm is employed to perform this function, so that when a new order comes in that requires fractions of shares, these can be allocated directly from internal inventory. In the case of the inventory being depleted, an order thats been rounded-up to the nearest whole number is forwarded to the brokers counterparty. When this order is filled, the client order quantity is distributed to the customer, while the remaining fractional quantity is placed in the brokers inventory.

In this way, the broker only has to keep a relatively small amount of shares on its books, and with automated position closure protocols in place, it can ensure that its exposure to any given stock will never exceed a predefined amount before those excess shares are automatically liquidated.

Pre-allocated block orders can also be used to place large group orders for a brokerages customers that can include whole shares, fractions, and notional amounts, with an order management system in place to allocate the correct qualities to relevant customers. The approach may seem a great deal more complex on the surface, but modern brokerage platforms are more than up to the task, allowing brokers to take control of their offerings, appeal to a wider client base, increase volumes, and generate revenues from commissions or fees depending on the business model.Introducing DXtrade XT

DXtrade XT is Devexperts flagship multi-asset trading platform for brokers offering exchange-traded securities and derivatives. It includes a web-based trading portal and native iOS and Android mobile applications. The platform features a fractional order management system with support for both fractional quantities and notional amounts, and comes packaged with a suite of broker administration tools.

Fully branded with company logos and colors, DXtrade XT is easy to integrate with any existing brokerage architecture and comes out-of-the-box with market data and news provision integrations. Maintained and supported by Devexperts around the clock, it has everything a broker requires to start their own in-house fractional shares offering and management thereof.

It looks pretty sweet, too. Get in touchto start the conversation about what it can do for your business. Or get onto your broker and request that they integrate it!

Featured image sourced from Shutterstock

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content.

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Giants walk off on Bailey’s inside-the-park homer

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Giants walk off on Bailey's inside-the-park homer

SAN FRANCISCO — Patrick Bailey hit a three-run, inside-the-park home run with one out in the ninth inning, lifting the San Francisco Giants to a 4-3 win over the Philadelphia Phillies on Tuesday night.

Bailey became just the third catcher in MLB history to hit a walk-off, inside-the-park home run, joining the Chicago Cubs’ Pat Moran in 1907 and the Washington Nationals’ Bennie Tate in 1926.

Bailey’s homer would have been an outside-the-park home run in 29 of 30 ballparks, with Oracle Park being the exception.

Mike Yastrzemski reached base twice and scored to help the Giants to their sixth win in seven games.

Casey Schmitt began the rally with a leadoff double. After Jung Hoo Lee popped out, Wilmer Flores lined a single to center.

Bailey, who grounded into a double play and struck out in two of his previous at-bats, then smashed a 1-0 fastball from Jordan Romano (1-4) into right-center field that ricocheted off the brick part of the wall.

Ryan Walker (2-3) retired one batter, with two on in the top of the ninth, to earn the win.

Phillies All-Star Kyle Schwarber had two hits, including his team-leading 28th home run.

Schwarber flew out, struck out and was hit by a pitch before homering off Giants reliever Spencer Bivens into McCovey Cove. Brandon Marsh, who singled as a pinch hitter leading off the inning, scored on the play.

Two days after being named an All-Star for the second time in his career, Robbie Ray gave up four hits and one run in 5⅔ innings.

The Associated Press contributed to this report.

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Ohtani takes Miz deep but phenom fans 12 in win

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Ohtani takes Miz deep but phenom fans 12 in win

MILWAUKEE — Shohei Ohtani greeted Jacob Misiorowski with a leadoff homer, but the Milwaukee Brewers‘ rookie phenom got the last word.

After giving up Ohtani’s 431-foot blast, Misiorowski responded with another dominant outing. He struck out a career-high 12 batters — including two-way superstar Ohtani in the third inning — to lead the Brewers to a 3-1 victory over the Los Angeles Dodgers on Tuesday night.

“It’s Shohei Ohtani,” Misiorowski said. “You kind of expect [that]. It’s cool to see him do it in action, but it fires me up even more coming back the next at-bat and striking him out. I’m right there. I think it was a moment of like, ‘OK, now we go.'”

Misiorowski, whose fastball routinely tops 100 mph, threw an 88.2 mph curveball on an 0-2 count to Ohtani, who crushed it for his 31st homer. That’s the most by a Dodgers player before the All-Star break.

It was the 21st career leadoff homer for the three-time MVP, who struck out swinging on a curveball in the third and walked to start the sixth. That was the only walk given up by Misiorowski, who scattered four hits.

“Really good stuff, aggressive in the zone,” Ohtani said through an interpreter. “But what really stood out to me was his command and control.”

Misiorowski outdueled three-time Cy Young Award winner Clayton Kershaw, who surpassed 3,000 career strikeouts in his previous outing. Asked Monday about his matchup with Misiorowski, Kershaw said he only knew that the 6-foot-7 right-hander threw hard.

“I know him now, huh?” Kershaw said Tuesday. “That was super impressive. That was unbelievable. It was really special. Everything. Obviously the velo, but he’s got four pitches, commands the ball. I don’t know how you hit that, honestly. That’s just really tough.”

Misiorowski was glad to get Kershaw’s attention.

“I saw something online that he didn’t now who I was, so I hope he knows me now,” Misiorowski said. “It’s kind of cool.”

In five starts since the Brewers called him up from the minors, Misiorowski has already beaten Kershaw and 2024 NL Rookie of the Year Paul Skenes. In another outing, Misiorowski carried a perfect game into the seventh inning.

“He’s just broken the shell,” Brewers manager Pat Murphy said. “He’s just out of the egg, all arms and legs. He’s still got gooey stuff coming off, you can see it, all arms and legs, but there’s something special about him.”

The numbers would indicate as much. Misiorowski is 4-1 with a 2.81 ERA and has given up only 12 hits in 25⅔ innings.

He topped out at 101.6 mph and threw 20 pitches of at least 100 on Tuesday. He also threw 19 curveballs after using curves only 10% of the time before Tuesday.

He was coming off his only shaky performance, giving up five runs — including a grand slam by Brandon Nimmo — and three walks over 3⅔ innings Wednesday in a 7-3 loss to the New York Mets.

It looked as if it might be more of the same after Ohtani went deep. Misiorowski responded by striking out 12 of the next 16 batters.

“I think that’s my job, is to figure it out on the fly,” he said. “I feel like I did it tonight.”

He got out of a jam in the sixth. The Dodgers trailed 2-1 and had runners on second and third with one out, but third baseman Andruw Monasterio fielded a grounder and threw out Ohtani at the plate, and Misiorowski retired Michael Conforto on a grounder.

Misiorowski pumped his fist as he headed toward the dugout, then watched the Brewers’ bullpen nail down the win.

“It’s so satisfying,” Misiorowski said. “It’s just a dream come true, to do what I did.”

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Mets’ Mendoza: Snubbed Soto ‘an All-Star for us’

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Mets' Mendoza: Snubbed Soto 'an All-Star for us'

BALTIMORE — The New York Mets consider Juan Soto to be a bona fide All-Star, despite the snub he received from those who selected the National League squad for the Midsummer Classic on July 15.

Soto, in his first year with the Mets, has performed well enough to earn the respect of his manager and teammates. In their opinion, he’s deserving of a place in the All-Star Game next week in Atlanta.

“He’s an All-Star for us,” manager Carlos Mendoza said Tuesday night after the Mets beat Baltimore 7-6. “It’s frustrating, but I’m hoping in the next couple of days we hear something and he makes it.”

Soto drove in the winning run with a sharp single on the first pitch of the 10th inning. That capped a night in which he went 3 for 5 to raise his batting average to .269 with 21 homers and 52 RBIs.

Soto has walked 72 times, by far the most in the majors, but he can also lash out at a pitcher when necessary.

“He’s got a pretty good understanding of what the pitchers are trying to do to him,” Mendoza said. “There is his awareness of the game, he’s going to see pitchers. There are times when he’s going to be aggressive. Tonight was one of those nights. First pitch in the 10th, he’s attacking.”

Soto made the All-Star team as a member of the Nationals, Padres and Yankees each year since 2021. The streak appears to be over. But his teammates believe he deserves to go.

“What he done all year is just incredible, and the results are good enough,” Mets starting pitcher Clay Holmes said. “The consistency he’s showed up with, at the at-bats he’s taken, is more than an All-Star. He’s one of the best in the game and a big part of our lineup.”

Soto seems rather philosophical about the snub.

“Sometimes, you’re going to make it and sometimes you don’t,” he told reporters after Sunday’s loss to the Yankees. “It’s just part of baseball.”

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