How are whole US shares treated compared to riskier fractional shares?

Fractional shares come with an additional risk, as pointed out by the terms and conditions

Fractional share investment carries some additional risks to whole share investment. Fractions of shares traded through our Service cannot be traded on trading venues and are illiquid and unrecognised outside our trading platform and Our US Broker. Fractional shareholdings bought through our Service cannot be transferred to another service provider and can only be liquidated through us.

In essence they are illiquid un-transferable and difficult to move in the event of an issue with the broker.

What I don’t know is if whole US shares pose the same risk?

e.g. if you but 0.5 of X and later 0.6 of X you have 1.1 of X. Is the 1 whole share considered a whole share and not subject to the same level of risk as fractional shares or does the nature of the US share dealing service mean that all US shares are treated as fractions?

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I seem to recall someone from freetrade talking about this when they were launched.

My recollection was that multiple fractional buys that add up to a whole share or more would be treated as a whole share plus a small fraction of a share.

In your example, 1 share plus 0.1 of a share, rather than as two individual fractional holdings.

I’ll try and remember where I saw that and link it here if I can.

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I had a vague recollection of something like that but then wondered if maybe I heard it on a video as I failed in searching.

That’s how I expect it to be but I’m just looking for clarification so I understand how it works.

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Here’s the discussion. Viktor says ‘1 whole share is 1 whole share no matter what’

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That looks like the answer, thanks for hunting that down. Seems to suggest that once you have a whole number that those whole shares are treated as such and lose the additional (albeit very small) risk that fractionals have.

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Nice one :+1:

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@Viktor will we get the option to buy whole shares of American companies , or will it always be fractional shares ?

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Currently you can use limit orders to buy only whole shares. You can also buy near to the whole share via manipulating the amount, not perfect, but 0.002 of a share isnt a huge issue.

I do believe they’ve said that they plan to implement buying in amounts of shares as well as the current option of value in the future.

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