Interactive Brokers is launching fractional trading of shares and ETFs listed on both the Toronto Stock Exchange (TSX) and CBOE, the broker confirmed this week.
Fractional share trading allows investors to buy into companies with a single listed stock is already prohibitively expensive. It helps to satisfy the demand from smaller traders for some of the mega cap stocks where individual shares are already priced in the hundreds of dollars.
Interactive Brokers said it would also be extending fractional share trading to Canadian-listed ETFs and shares. The minimum trade value for fractional share trading has been set at $1.00, and the feature will be compatible with the broker’s basket trading features.
Owners of fractional shares will still receive dividends and they will also have the option to participate in corporate actions.
This is part of a wider trend at Interactive Brokers. In June it confirmed that it would be offering fractional share trading on stocks listed on Nasdaq Copenhagen. This came as part of its expansion of European share trading, when it opened up access to both Nasdaq Copenhagen and the Prague Stock Exchange.
Interactive Brokers first introduced factional share trading just before the pandemic, and it has been providing the feature for European stocks for just over a year. It was one of the first major retail brokers to offer fractional share trading in 2019, shortly after Charles Schwab launched its own service.
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Many US megacap stocks are now trading at over $100 per share. Microsoft stock, for example, is priced at over $300, while Visa trades at over $200. Shares in United Health are often trading at around $475. Thousands of smaller investors are interested in owning these companies and want to regularly buy stock in them. Fractionalised trading is a growing trend and should help to broaden market access for smaller investors.
Interactive Brokers has also announced the expansion of its Overnight Trading Hours service, which now lists over 10,000 US stocks and ETFs. It was one of the first brokers to introduce Overnight Trading on US stocks and ETFs, and the enhanced offering allows clients to trade an even broader range of US equities nearly 24 hours a day, five days a week.
Clients now have the flexibility to trade more US stocks and ETFs when it’s convenient, and clients in Asia and Europe can trade a wider variety of US equities during local market hours. To supplement the Overnight Trading liquidity provided by Interactive Brokers’ own IBEOS Alternative Trading System (ATS), Interactive Brokers is now also connected to the Blue Ocean ATS.
