I am curious to know the mechanism by which Trading 212 offers fractional shares. Does LSE, NYSE etc actually now sell in fractions? Or, as I am guessing, does T212 handle this by keeping it’s own intenal small balance of a stock from which it enables fractions to be bought and sold? So is T212 is effectively taking the opposite side of a trade, at least so far as the fractional part goes? This would be a minor thing, and not worry me at all, since their balance need never be more than + or - 1. I think the ability to use fractional shares to start a position in an expensive stock like AMZN is a great help. Just curious.
To my (unofficial) knowledge, trading venues do not deal with fractional shares. Every broker that offers this feature keeps track of the fractions internally, as per your assumption.
I tried to come up with a way to explain it, but reading it back to myself I just thought I sounded confusing and ridiculous xD
instead here is a link to investopedia, and an article written by those who understand this system much better than myself and with much greater literary abilities.
the long story short as I see it, people pool their money together through a brokerage to buy shares. the brokerage acquires the whole shares and then assigns portions to people according to their purchase, holding the remainder themselves until another investor makes a purchase or sale request. in terms of dividends, you are paid your portion and the remainder goes to the person who owns the other portion. in the case this is T212 then T212 would have earned these remaining dividends.
Thank you. That is interesting. It is very nice that T212 offers this facility.
The only problem is not being able to buy or sell frictional shares using price limits. Unless maybe i got it all wrong?