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Fractional Trading

delete2024-03-19
delete2
PRE
AI
Z
Zhi Da *
V
Vivian W. Fang
W
Wenwei Lin
DOI：10.1093/rfs/hhae012delete
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Abstract

Abstract

En 中文
Fractional trading (FT)-the ability to trade less than a whole share-removes barriers to high-priced stocks and facilitates entry by capital-constrained retail investors. We observe a surge of tiny trades, measured using off-exchange one-share trades, among high-priced stocks compared to low-priced stocks after FT is introduced to the U.S. equity markets. These tiny trades, when coordinated during attention-grabbing events, are forceful enough to exert large price pressure on high-priced stocks. Further evidence suggests that FT can even fuel meme-stock-like trading frenzies and bubbles in high-priced stocks, for which the feedback effect likely plays a role. (JEL G10, G12, G14, G18, G32, G41)

Journal

Review of Financial Studies cover
Review of Financial Studies
IF:
5.4
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2.8K
Citations:
3.0W

Organization

I
indiana university system
Scholars:
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Papers: 3.5W
Citations: 38
E
European Corporate Governance Institute
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40
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Citations: 700
U
University of Notre Dame
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Citations: 1.7W
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