Interactive Brokers launches fractional trading European stocks and ETFs
Interactive Brokers LLC (NASDAQ:IBKR) today launched its fractional trading feature for European stocks and ETFs, three years after its initial launch for US securities back in 2019.
The move, geared toward attracting more young clients, eliminates the barriers that many investors face when trying to invest in a diversified portfolio of listed securities. Fractional share trading allows investors to diversify their investment portfolios by spreading their relatively small capital over a broader range of stocks.
Charles Schwab was the first among US major brokers to let investors buy and sell fractions of stocks. As they looked beyond the no-fee trading war, the move set off a new rush among other brokers to do the same amid increased competition in the industry to attract the next generation of investors.
IBKR explains that the new feature comes in handy for both Lite and Pro clients who can’t afford to pay a high price tag for companies like Amazon or Google. A total of 1.85 million customer accounts were active at IBKR during April 2022, up two percent month-on-month, and was also 36 percent higher year-on-year.
The Greenwich, Connecticut-based company also revealed that on average it charged clients commission fees of $2.57 per order, down from $2.68 in March. This figure includes exchange, clearing and regulatory fees, with the key product metrics coming out at $1.77 for stocks, $3.82 for equity options and $3.56 for futures orders.
“Interactive Brokers was the first big broker to introduce fractional trading in U.S. shares and it’s been very popular with our clients,” said Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers. “Adding European fractional shares gives investors the opportunity to trade across markets in a more affordable way, in addition to the benefit of investing in more stocks to help clients achieve diversified portfolios.”
Fractional shares trading is available on all of Interactive Brokers’ trading platforms including IBKR GlobalTrader, a mobile trading application to trade global stocks. European stocks and ETFs listed on select exchanges, and with average daily volume above $5 million and market cap above $5 billion, are eligible for European fractional shares trading.
The stock-trading business model of those financial giants resembles the successful features of other players seeking to gain market share, including those offering fractional share trading, such as DriveWealth.
DriveWealth, which launched its fractional share trading capabilities in 2016, enables investors of any size to gain affordable access to the US stock market from a range of countries, including India, Nigeria, and Brazil.