With Stake, you have the opportunity to buy a fraction of a company’s stock instead of having to pay the full amount to own one full share. While many stocks are priced in the hundreds of dollars per unit, fractional shares allow you to invest with as little as US$10. Please note that fractional shares may have different rights and risks from full share interests in the same security. For more information, please read here.
Orders and execution
When buying fractional shares, you set the dollar value of your investment (e.g. US$100 of TSLA). When selling, you’ll enter the number of shares you wish to sell (e.g. 4.3142 shares of TSLA). Please note that fractional shares can only be traded using Market or Stop orders. You can read more about different order types here.
You may receive multiple confirmations if your trade contains more than one full share. For instance, if you sell 3.4563 shares of TSLA, the fractional and whole share components will appear on separate trade confirmations.
Fractional orders are subject to the NBBO (National Best Bid Offer) regulations of the U.S. market which means you'll always get the best available price for your trade at the time of execution, no matter the size of your order.
Ownership
Fractional shares carry the same level of ownership as full shares do. Your holdings are registered and held in your name via the custodian model in the U.S. When you submit an order for less than one full share, our broker-dealer DriveWealth will purchase a whole share and designate you as the owner of your fraction.
You retain the same beneficial rights (voting, dividends etc) as a fractional shareholder.
Dividends
You are eligible to receive dividends on your fractional shares on a pro-rata basis. For example, if you own 3.25 shares in a company paying a US$10 dividend, you will receive a dividend payment of US$32.50 (US$10 x 3.25).
Voting rights
Voting eligibility can vary for fractional shareholders, depending on several factors.
Record date
Since the shareholders of a stock are constantly changing, companies set a record date to determine eligibility for upcoming votes. This date is used as a cut-off point: you'll need to have held the security as of the record date in order to be eligible. These dates are set by the company and are not determined by Stake or our broker-dealer.
Fractional vote value
While you may be invited to vote as a fractional shareholder, the company ultimately decides what value these votes have. Some companies choose to discard votes on fractionals and others may adjust the vote value. These decisions are set by each company and not determined by Stake or our broker-dealer.
If eligible, you’ll receive an email from Stake via Broadridge informing you about an upcoming vote along with proposals and instructions. Just follow the link to have your say.
Transfers
Please note that fractional shares cannot be transferred out. You can transfer your whole shares, and liquidate any fractional component to then transfer the settled cash as part of your portfolio transfer. Cash positions cannot be transferred via Depository Trust Company (“DTC”)only via the Automated Customer Account Transfer Service (“ACATS”). Learn more about Portfolio Transfers here.
