The latest service to be introduced to Interactive Brokers’ UK and European customers is fractional share trading over European stocks and ETFs. Which are being added to the existing US fractional share trading facilities offered by the broker.
Fractional share trading allows investors to buy a small portion of a share and has proved to be popular with traders and investors who would like exposure to high priced stocks such as Amazon (AMZN), but who can’t afford or justify holding securities priced at $2400 a share in their portfolio.
Being able to buy say, one-tenth of an Amazon share makes an investment far more practicable and affordable for smaller accounts.
Fractional share ownership can also be used to maximise investments, to get the most out of an investor’s cash, allowing them to gain a bigger exposure to a stock or exchange-traded fund than they could previously achieve when dealing in whole or round numbers.
In fact, Interactive Brokers already offers a cash quantity order type, that will invest a specified sum into a stock, automatically using fractional share trading to maximise, or round out the investment.
European and UK investors will be able to trade fractional shares on a list of more than 470 securities, which includes stocks and ETFs.
Interactive Brokers will review the list regularly, based on criteria linked to market cap and the volumes traded in the underlying issues.
And if the US experience is anything to go by, then the list could grow quite quickly.
Fractional share trading has been one of the most successful services that the online broker has introduced to American investors, and it has proved to be a powerful account acquisition and marketing tool for the firm.
Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers said of the launch of the new service:
“Interactive Brokers was the first big broker to introduce fractional trading in U.S. shares and it’s been very popular with our clients.”
He went on to say:
“Adding European fractional shares gives investors the opportunity to trade across markets in a more affordable way, in addition to the benefit of investing in more stocks to help clients achieve diversified portfolios.”
Fractional share trading will be available across all Interactive Brokers’ dealing platforms, no minimum investment is required and dealing charges will start from as low as $1.00, or foreign currency equivalents.