Fractional Trading: Unlocking Growth and Opportunity for U.S. Broker-Dealers

Fractional share trading has transformed the U.S. brokerage landscape, breaking down barriers for retail investors and opening a new era of growth for broker-dealers. As competition intensifies and investors demand more flexible, accessible solutions, fractional trading has become a must-have feature for any forward-thinking brokerage. Let’s explore how this innovation is reshaping the market, backed by data from the largest U.S. broker-dealers, and why it’s a strategic win for brokers and their clients.

What Is Fractional Trading?

Fractional trading allows investors to buy less than a whole share of a stock or ETF, often for as little as $1. This means investors can own a slice of high-priced stocks like Tesla or Amazon, regardless of their account size. The result: investing is democratized, and portfolio diversification is within reach for everyone.

The Fractional Trading Surge: By the Numbers

The adoption of fractional trading by major U.S. brokers has been swift and widespread:

Key Market Impact:

• After Interactive Brokers introduced fractional trading, high-priced stocks saw a 14.1% increase in daily off-exchange one-share trades.
• When Fidelity rolled out the feature, this increase jumped to 138.7% for high-priced stocks.
• Charles Schwab reports average buy orders of $300 through its Stock Slices service, enabling investors to buy multiple slices even in expensive stocks.

Broker-Dealer Benefits: Why Fractional Trading Matters

1. Expanding the Customer Base

Fractional trading removes the capital barrier, allowing anyone, from college students to retirees, to participate in the market. This inclusivity brings in a larger, more diverse clientele, driving up assets under management and long-term growth.

2. Increased Trading Volume and Engagement

With the ability to invest small amounts, clients trade more frequently and diversify more broadly. The surge in tiny trades—especially in high-priced stocks—has been dramatic, fueling higher trading volumes and deeper client engagement.

3. Competitive Differentiation

In a world where zero-commission trading is standard, fractional shares set brokers apart. Firms that offer this feature are seen as innovative and customer-centric, making them more attractive to new and existing investors.

4. Better Cash Utilization and Portfolio Diversification

Clients can invest every dollar, reducing idle cash and enabling true diversification—even with modest account balances. This leads to higher client satisfaction and stickier assets.

5. Enabling Modern Advisory Solutions

Fractional trading underpins robo-advisors, model portfolios, and direct indexing, allowing brokers to offer cutting-edge wealth management products to clients of all sizes.

Statistics Spotlight: Fractional Trading’s Real-World Impact

• Robinhood: Following the launch of fractional shares, trading intensity among users, especially in high-priced stocks, increased significantly.
• Charles Schwab: Average buy order via Stock Slices is $300, showing strong demand for partial ownership in expensive stocks.
• Fidelity: Over 7,000 stocks and ETFs available for fractional trading, with seamless dividend reinvestment in fractional amounts.

Implementation: The Technology Edge

To offer fractional trading, brokers need robust back-office and trading infrastructure. ETNA Trader offers a turnkey solution, integrating fractional shares as a core back-office function, making it easy for brokers to launch, manage, and scale this capability with confidence.

Ready to Grow Your Brokerage?

Fractional trading isn’t just a feature—it’s a growth engine. It attracts new investors, increases trading activity, and positions your firm at the forefront of innovation. If you’re ready to unlock these benefits, book a personal demo with the ETNA Trader team and see how our platform can help you offer seamless, compliant fractional share trading as a back-office function.

Book a demo with ETNA Trader today to get a personalized walkthrough and see how you can lead the next wave of brokerage innovation.