Fractional Share Reporting: What It Is and Why It Matters

On Feb. 23, the industry will begin reporting fractional share trading through the Trade Reporting Facilities and Security Information Processors, establishing what will become an industry-wide standard for market data. The move better addresses retail trading behavior to ensure market data accurately reflects fractional trading.

“It's a small change with a very broad reach,” said Amy Kohn, Head of Off-Exchange Equity Product Management at Nasdaq.

The new reporting of fractional share trading represents a significant step towards greater market transparency. By reporting fractional shares through the TRFs and SIPs, the industry is advancing trust and access to markets at a time when fractional trading has become increasingly popular among retail investors.

Prior to this change, fractional shares were rounded up to one share for orders under one share, or the fractional amount was truncated when reporting trades of more than one share. Under the new standard, fractional amounts will be reported up to six digits after the decimal.

As investors seek more flexible access to high-priced securities, fractional share trading has opened doors that were previously closed. Stocks trading at hundreds or thousands of dollars per share are now available to investors in their preferred dollar amount.

The ability to buy fractional shares allows retail investors to spread their capital across more stocks and ETFs, creating more flexible investment strategies.

"It’s been a great story for customer access, creating new wealth and new customers getting into the marketplace,” said Kohn. "They're becoming more sophisticated and taking control in their own hands."

The change coincides with other industry developments that have made trading more accessible to individual investors. Since 2020, retail trading volumes have grown significantly after many retail brokers eliminated or reduced commissions.

"Because there's more trading activity, regulators, investors, and the industry as a whole desire more transparency," Kohn said. "And that's what this change offers."

The enhanced reporting standard will impact more than just retail investors. Institutional investors will gain access to more complete volume data. Data vendors will be able to provide more precise market data to their customers. And regulators will have enhanced tools for market integrity supervision and oversight, supporting more informed decisions about market structure reforms.

"Nasdaq provides the critical market infrastructure for trade reporting, and visibility into trading off-exchange," said Kohn, explaining Nasdaq's role.

The fractional share reporting standard reflects the belief that markets function better when they're transparent. As retail trading continues to evolve and grow, the enhanced data will provide market participants and regulators with a clearer picture of actual trading activity, supporting the integrity and supervision that underpin well-functioning markets.