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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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Day 77: Q&A – Trump’s tariffs, Putin’s Arctic, and penguins

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Day 77: Q&A - Trump's tariffs, Putin's Arctic, and penguins

👉 Follow Trump 100 on your podcast app 👈

On Day 77, US correspondents Mark Stone and David Blevins answer your questions on everything from Trump’s “Liberation Day” tariffs and their impact on American consumers, to Trump’s relationship with Putin and if they have plans for the Arctic, and penguins.

If you’ve got a question you’d like Mark, Martha, and James to answer, you can email it to trump100@sky.uk.

Don’t forget, you can also watch all episodes on our YouTube channel.

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Man arrested over wildfire that triggered ‘major incident’ in Northern Ireland

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Man arrested over wildfire that triggered 'major incident' in Northern Ireland

A man has been arrested by police investigating a “significant” wildfire that triggered a major incident in Northern Ireland.

More than 100 firefighters and 15 fire appliances were deployed on Saturday to Sandbank Road, Hilltown, to tackle the blaze which is believed to have been caused deliberately, fire chiefs said.

Northern Ireland Fire and Rescue Service (NIFRS) said the fire had a front of approximately two miles “including a large area of forestry close to property”.

It was extinguished at 2.53am on Sunday and the major incident status lifted, the NIFRS said.

“The cause of this fire is believed to have been deliberate,” chief fire and rescue officer Aidan Jennings said.

The Police Service of Northern Ireland said on Sunday that a 25-year-old man had been arrested “on suspicion of arson being reckless as to whether life would be endangered, and non-related driving offences”.

“He remains in custody at this time as enquiries continue into the circumstances surrounding the fire,” the force added.

A wildfire broke out in Northern Ireland. Pic: Sky Watch NI
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The wildfire on Sandbank Road, Hilltown. Pic: Sky Watch NI

A wildfire broke out in Northern Ireland. Pic: Sky Watch NI
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More than 100 firefighters were at the scene of the fire. Pic: Sky Watch NI

Various fires erupted across England this week amid uncharacteristically warm and dry conditions for the time of year.

On Saturday, helicopters were deployed to tackle Scotland’s fourth wildfire this week, with police saying a blaze “which started in the Newton Stewart area has spread northwards and is expected to reach the Loch Doon area of East Ayrshire around 12am on Sunday”.

Police Scotland added: “As a precautionary measure members of the public are asked to avoid the Loch Doon area and anyone who may be camping in the area is advised to leave.”

Dorset wildfires
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Moors Valley Country Park blackened by fires this week

Elsewhere in England, Devon and Cornwall Police said they were assisting the fire service with temporary road closures on the A30 in the Bolventor area as they tackle “a number of fires” on moorland.

In Dorset, Moors Valley Country Park was forced to close after multiple wildfires broke out there on Wednesday.

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Wildfires spread across nature reserve

Separate incidents were then reported at Upton Heath in Poole on Wednesday, and nearby Canford Heath in the early hours of Thursday.

Friday was officially the warmest day of the year so far – with temperatures in the south of England reaching 23C (73.4F) – the highest since 21 September last year, according to the Met Office.

The weather conditions triggered a “severe” wildfire rating for parts of the UK on Tuesday.

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Man shot dead in Stanley, County Durham

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Man shot dead in Stanley, County Durham

Police are investigating after a man was shot dead in County Durham.

Officers were called to an address in Elm Street, Stanley, at about 5.20pm on Saturday after reports of a “disturbance”, Durham Constabulary said.

A man in his 50s was found to have been shot and despite the efforts of paramedics he was pronounced dead at the scene.

His family have been told and are being supported by specially trained officers.

Specialist crime scene investigators are at the scene, and officers are carrying out house-to-house enquiries.

A cordon is in place and is expected to stay there for some time.

Detective Superintendent Neil Fuller said: “This is a truly shocking incident in which a man has been shot and has sadly died.”

He added: “Residents may see an increased police presence in the area. I would like to thank them for their support while we carry out this investigation.

“Our thoughts are with the man’s family at this time.”

Read more from Sky News:
Furious row after Labour MPs denied entry to Israel
Man arrested over wildfire that triggered ‘major incident’

Durham Constabulary has urged anyone who witnessed the incident or has dashcam footage or CCTV to contact the force.

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