Last updated: February 20, 2024
MFI’s fractional share trading functionality allows you to buy and sell fractional share quantities and dollar amounts of certain securities, so you may end up with a fraction of a share, a whole share, or more than one share (“Fractional Trading”). Fractional Trading presents unique risks and has certain limitations that you should understand before placing your first trade. Please review and understand the important items that the SEC has indicated you should consider if you chose to trade fractional shares.
You can generally trade exchange-listed National Market System (“NMS”) stocks using the Fractional Trading functionality. However, certain securities may not be made available for Fractional Trading, and MFI reserves the right to modify the list of eligible securities at any time without notice to you. Any modification to the list of eligible securities available for Fractional Trading will not affect any fractional share interests previously acquired by you.
In certain limited circumstances, you may also be able to sell a fractional share interest in a security that is no longer an NMS stock, provided that it was an NMS stock at the time you purchased it and your fractional interest was acquired using the Fractional Trading functionality.
A current list of the securities eligible for fractional trading is available on the moomoo app.
MFI standard commissions and fees apply to all trades.
Buy orders must be at least $5.00. Sell orders must be at least $0.01. Orders that do not meet the minimum order amount will be rejected.
Orders to buy or sell may be entered using either a fractional share quantity up to four decimal places (.0001) or a dollar value up to two decimal places (e.g., $350.50). Dollar value orders will be converted into share quantities for execution, again, to four decimal places. In all cases, when converting dollar-value orders into share quantities, the share quantities will be rounded down. For a variety of reasons, including but not limited to this conversion convention, the actual amount of an executed dollar-value trade may be different from the requested amount. The actual amount of an executed order to buy or sell a dollar value of a security may also be lower than the amount requested due to the deduction of certain fees or taxes.
Market orders only. Regular trading hours only.
Fractional Trading supports market orders only for fractional share quantities of a security that are good for that day’s trading session.
Unexecuted fractional share orders shall be held open for the next trading session.
Fractional Trading after-hours.
Fractional Trading orders entered outside of market hours are good until the close of the next trading session. For orders placed prior to market open, MFI may wait for the primary exchange to open before commencing trading in a particular security. In the event you place a non-marketable limit order with a fractional share component, the fractional component may not execute until the order becomes marketable, and therefore, your order may receive a partial execution or may not execute at all.
You may attempt to cancel an order, but there is no ability to request that an order be modified once it has been submitted. Instead, you will need to cancel your order and then submit a new one. If you attempt to cancel an order, understand that there is no guarantee that an open order can be canceled, in whole or in part.
Because of this, your ability to buy or sell a security using Fractional Trading may be more restricted than if you were to buy or sell traditional whole share quantities of the same security.
MFI’s order management system will send each fractional share order to its clearing broker in real-time.
MFI will act as your agent and MFI will act in either a principal or a mixed capacity (i.e., both as agent and principal) when executing your order. The whole share component of any order will be executed by MFI as agent at the price MFI receives in the market. The fractional share component of any order will be executed by MFI as principal against its principal account. When a fractional share interest is allocated to your account, MFI will maintain custody of the whole share in which you have the fractional interest. Any fractional share interest in the whole share not allocated to your account may be allocated to other customers or to MFI as principal.
All orders with a fractional share component will be marked “Not Held,” which gives MFI the time and price discretion to execute the order without being held to the security’s current quote. In connection therewith, each time you submit an order to buy or sell a fractional share quantity or dollar amount of a particular security, you authorize MFI to “work the order.” If you do not wish your order to be handled on a Not Held basis, you should not engage in Fractional Trading.
In the case of a sale of the fractional component of any order, that sale will be executed at the then current National Best Bid or Offer (“NBBO”). Please note that this price may be higher or lower than the price at the time you place your order. In the case of a purchase of the fractional component of any order, if MFI has sufficient principal inventory, that purchase will also be executed at the then current NBBO. However, if MFI does not have sufficient principal inventory, that purchase will be executed at the price received in the market.
When trading as principal for its own account, MFI may make a profit or incur a loss on each trade. Additionally, MFI may be required to correct or adjust trades that (for a variety of reasons) have been executed in amounts that either exceed or fall short of the amounts requested. These trade corrections and adjustments could arise in connection with either or both of the agency and principal components of the executed orders. Regardless, these trade corrections and adjustments will be executed by MFI in a principal capacity, and when trading as principal for its own account, MFI may make a profit or incur a loss.
In the event of a trading halt of a security, Fractional Trading of that security will also be halted, and your order will be held until trading resumes. However, your order is good only for that day’s trading session, or in the case of an order entered outside of market hours, good until the close of the next trading session. If trading does not resume or your order is not executed by the close of that day’s Fractional Trading window, it will be cancelled.
FINRA rules define a “pattern day trader” as “any customer who executes four or more day trades within five business days”. Trading in fractional shares will count towards day trades.
MFI does not guarantee the liquidity of fractional shares, even if fully shares of the stock are liquid. This means you may have difficulty selling fractional shares in certain circumstances and could potentially lose money on the investment.
The fractional share component of certain orders may not be eligible for “Price Improvement.” Also, Price Improvement will operate differently, and in some situations less advantageously, in connection with Fractional Trading from the way it would if you were trading in whole share quantities. Additionally, because in certain situations Price Improvement on the fractional share component of an order will affect the execution price rather than the share quantity of an order, the effect of the improvement on a dollar-value order in those situations will be to increase or decrease the value of the order outside of what was requested.
Fractional share interests in a security generally have different rights from full share interests of the same security. Please read this disclosure in its entirety carefully to understand your rights regarding your fractional share interests.
If your account has been approved for margin, notwithstanding the terms of the Customer Agreement, MFI will not lend (hypothecate) your fractional share positions.
As the owner of fractional shares it is your responsibility to file all tax returns in accordance with such treatment and to take no action inconsistent with such treatment.
When you own fractional shares you will still receive dividends and participate in other corporate actions such as stock splits or reverse stock splits. You will participate in these corporate actions based on the percentage of a whole share that you own. For example, if you own .75 shares of XYZ stock, and XYZ distributes a dividend of $10.00 per share, you would receive $7.50. In the case of a dividend paid on, or a redemption of, a security, the dividend or redemption proceeds will be passed along to you in proportion to your ownership interest, inclusive of fractional share interests. MFI will only support payments that are equal to or greater than $0.01 per share. Amounts smaller than that, or non-divisible amounts (based on the .001 rounding convention), will be handled in accordance with the process described in the section titled “Undistributable Interests”.
For mandatory reorganizations, such as mergers and acquisitions, or other involuntary corporate actions, such as stock splits or stock dividends, typically MFI will distribute interests in proportion to your ownership interest, inclusive of fractional share interests. MFI will distribute interests in fractional amounts to four decimal places. Amounts smaller than that, or non-divisible amounts, will be handled in accordance with the process described in the section titled “Undistributable Interests”. The foregoing notwithstanding, these situations are in all cases subject to the terms contained in the materials prepared by the issuer describing the corporate action, as well as MFI’s applicable policies and procedures, which may result in a different outcome from what is described above.
MFI will only support payments that are equal to or greater than $0.01 per share. Amounts smaller than that, or non-divisible amounts, will not be distributed. Instead, it is generally but not always the case that when the aggregate value to be distributed is less than or equal to $1.00, it will be retained by MFI, and when it exceeds $1.00, it will be escheated.
MFI will aggregate any proxy votes for fractional shares. I understand that, while MFI will report proxy votes, the issuer or issuer’s designated vote tabulator may not fully count such votes.
Fractional share positions cannot be transferred or certificated. The Automated Customer Account Transfer System (ACATS) does not support fractional share positions. If you want to transfer your account or specific share positions to another broker, you must sell your fractional positions and transfer the cash proceeds. Please note that this may have tax consequences.
If your account is closed, your fractional shares may be liquidated and the proceeds distributed to you as cash.