The European Securities and Markets Authority (ESMA) today issued a statement regarding derivatives on fractional shares.
The active marketing and sale of so-called ‘fractional shares’ by firms to retail clients is a relatively new phenomenon that has gained momentum in the context of on-line trading platforms and neo-brokers.
‘Fractional shares’ allow investors to participate in the share performance of an issuer by way of an instrument that tracks the share price but is available at a smaller purchase price, namely the pro rata share price of the underlying share. ‘Fractional shares’ usually allow the investor to receive the economic benefits stemming from dividends, but normally do not carry voting rights. ‘Fractional…
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