4 ms·
Well stocks can't be sold in tiny tiny fractions. n.b. Not true; a lot of retail brokerages are happy to deal in fractional shares. A common use case is implem
by patio11 8y ago
Well stocks can't be sold in tiny tiny fractions.
n.b. Not true; a lot of retail brokerages are happy to deal in fractional shares. A common use case is implementing dividend reinvestment, where you might have the 10 shares you own issue a dividend entitling you to .005 shares; many retail brokerages can trivially support this.
The "How?" is potentially interesting: over the entirety of a broker's book of business, there are a lot of holders of e.g. SPY, so the broker (or their internalizer) just buys (pick a number) 713 shares, assigns fractions correctly, and keeps a tiny bit of the last share on their own account. This comes out in the wash, because retail customers are extremely lucrative to service at scale, and having to be ~$100k long various publicly traded equities to keep the tollbooth running is cheap at the price.