Not All Fractions Are Created Equal: How Fractional Shares Can Be A Game-Changer For Brokers

Published

3 years ago

March 17, 2023

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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.

UK

UK looking at Denmark model to cut illegal migration

Published

19 mins ago

November 8, 2025

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UK looking at Denmark model to cut illegal migration

The Home Office is looking at what Denmark is doing to cut illegal migration, Sky News understands.

Last month, Home Secretary Shabana Mahmood dispatched officials to the Nordic nation to study its border control and asylum policies, which are considered some of the toughest in Europe.

In particular, officials are understood to be looking at Denmark’s tighter rules on family reunion and restricting most refugees to a temporary stay in the country.

Ms Mahmood will announce a major shake-up of the UK’s immigration system later this month, PA is reporting.

Labour MPs are said to be split on the move.

Some, in so-called Red Wall seats which are seen as vulnerable to challenge from Reform UK, want ministers to go further in the direction Denmark has taken.

But others believe the policies will estrange progressive voters and push the Labour Party too far to the right.

What are Denmark’s migration rules?

Denmark has adopted increasingly restrictive rules in order to deal with migration over the last few years.

In Denmark, most asylum or refugee statuses are temporary. Residency can be revoked once a country is deemed safe.

In order to achieve settlement, asylum seekers are required to be in full-time employment, and the length of time it takes to acquire those rights has been extended.

Denmark also has tougher rules on family reunification – both the sponsor and their partner are required to be at least 24 years old, which the Danish government says is designed to prevent forced marriages.

The sponsor must also not have claimed welfare for three years and must provide a financial guarantee for their partner. Both must also pass a Danish language test.

In 2018, Denmark introduced what it called a ghetto package, a controversial plan to radically alter some residential areas, including by demolishing social housing. Areas with over 1,000 residents were defined as ghettos if more than 50% were “immigrants and their descendants from non-Western countries”.

In 2021, the left of centre government passed a law that allowed refugees arriving on Danish soil to be moved to asylum centres in a partner country – and subsequently agreed with Rwanda to explore setting up a program, although that has been put on hold.

It comes as the government continues to struggle to get immigration under control, with rising numbers of small boat crossings in the Channel over the last few months and a migrant, deported under the UK’s returns deal with France, re-entering the country.

Some 648 people crossed the Channel to Britain in nine boats on Friday, according to Home Office figures, bringing the total for the year to 38,223.

Ms Mahmood wants deterrents in place to stop migrants seeking to enter the country via unauthorised routes.

She also wants to make it easier to remove those who are found to have no right to stay in the UK.

Sources told the PA news agency she was eager to meet her Danish counterpart, Rasmus Stoklund, the country’s immigration minister, at the earliest possible convenience.

Speaking on BBC Radio 4, Mr Stoklund likened Danish society to “the hobbits in The Lord Of The Rings” and said people coming to the country who do not contribute positively would not be welcome.

Mr Stoklund said: “We are a small country. We live peacefully and quietly with each other. I guess you could compare us to the hobbits in The Lord Of The Rings.”

“We expect people who come here to participate and contribute positively, and if they don’t they aren’t welcome.”

The split in Labour was apparent from public comments by MPs today.

Stoke-on-Trent Central Labour MP Gareth Snell told Radio 4’s Today programme that any change bringing “fairness” to an asylum system that his constituents “don’t trust” was “worth exploring”.

But Nottingham East MP Nadia Whittome, who is a member of the party’s Socialist Campaign Group caucus, said: “I think these are policies of the far right. I don’t think anyone wants to see a Labour government flirting with them.”

Sports

Poll: Mendoza top vote-getter as NFL draft’s QB1

Published

1 hour ago

November 8, 2025

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Poll: Mendoza top vote-getter as NFL draft's QB1

The volatility and unpredictability of the 2025 college football season has rippled through the group of draft-eligible quarterbacks.

ESPN repolled 25 NFL scouts and executives about who will be the first quarterback taken in the 2026 NFL draft, with the results drastically different from six weeks ago.

In the latest poll, Indiana‘s Fernando Mendoza was the top vote-getter with 13 votes, putting him ahead of Oregon‘s Dante Moore (6) and Alabama‘s Ty Simpson (3). Notably, none of those quarterbacks received a vote in the first poll, and all have eligibility remaining.

The other three quarterbacks receiving votes were Oklahoma‘s John Mateer (1), Cincinnati‘s Brendan Sorsby (1) and South Carolina‘s LaNorris Sellers (1). Only Sellers and Mateer had votes in the first poll.

“It’s not a stellar class,” one scout told ESPN. “If you add the maybes [who have eligibility and could leave school], now it gets interesting. The top is better than last year’s class, for sure.”

The top of this year’s crop has flipped from Sept. 20, when seven different quarterbacks received votes, with Sellers (8) edging out LSU‘s Garrett Nussmeier (7). Both players and their teams have struggled this season. Others receiving votes in the first QB1 poll were Miami‘s Carson Beck (3), Mateer (3), Penn State‘s Drew Allar (2), Arizona State‘s Sam Leavitt (1) and Texas‘ Arch Manning (1).

The sentiment regarding the class has soured a bit since the initial polling. Along with the dip in play from Sellers and Nussmeier, Allar suffered a season-ending injury and Manning hasn’t resembled anything close to what his family and recruiting pedigrees projected.

While Mendoza is the top vote-getter, he has yet to establish himself as a no-brainer No. 1 overall pick. He is trending that way, but there is not yet conviction behind those projections.

Mendoza transferred from Cal and has taken a leap under coach Curt Cignetti and the tutelage of offensive coordinator Mike Shanahan and quarterbacks coach Chandler Whitmer. His completion percentage is 72.3%, up from 68.7%, and he has thrown 25 touchdowns, nine more than last season at Cal. He has also rushed for four touchdowns and is averaging 9.5 yards per attempt, up from 7.8.

What do scouts like? They start with the basics of him being 6-foot-5 and 225 pounds. He idolizes Tom Brady, which is viewed as a strong North Star for a prospect.

“He has ‘wow’ throws and playmaking passer ability,” one scout told ESPN. “He can anticipate post-snap.”

Added another: “He’s decisive, and he sees everything well. He’s got accuracy down the field and is very tough in the pocket.”

There was a play against Iowa where Mendoza hung in the pocket and got decked by a Hawkeyes linebacker while delivering a perfect ball to a receiver in tight coverage.

Moore’s emergence has been sudden. He has started 13 games, including five at UCLA in 2023 before backing up Dillon Gabriel at Oregon last season. A redshirt sophomore who entered college as ESPN’s No. 2 overall player, Moore is 6-3 and 206 pounds. He attempted just eight passes last season but has maximized his starting role in 2025, with 19 touchdowns, a 71.4% completion percentage and 1,772 passing yards.

Simpson didn’t start a game until this season, which has led to speculation in NFL circles that he will return to college. (Quarterbacks with under 25 starts don’t have a consistent track record of NFL success.) Simpson has soared onto radars with 20 touchdowns and just one interception. He has completed 67.8% of his passes and thrown for 2,184 yards.

Sorsby might be the biggest surprise. While he struggled in high-wattage spots against Nebraska and Utah, he has clearly progressed.

One scout summed him up this way: “He’s big, tough, athletic and smart. He’s a leader and can make off-schedule plays and change arm angles. He’s got the ‘It.’ I think he’s very gifted.”