What is a Fractional Share Right (FSR)?
Fractional share ownership allows you to purchase shares in a rand amount, rather than share quantities.
Warren decides to buy a share in British American Tobacco PLC. Warren looks up the value of one “BTI” share and finds out that it costs R900 but Warren has R1500 in his account. Instead of buying one share and waiting until he deposits another R300 to buy another share, Warren can buy one full share and R600 worth of a “BTI” share through fractional share ownership.
Fractional shares are facilitated and created by our execution partner through a contract for difference (CFD). Warren is issued a CFD for a pro-rata percentage of the underlying whole share.
Through that CFD, Warren will have a contractual claim against our execution partner to the economic benefits and risks associated with ownership of “BTI” without having to own a full “BTI” share directly.
Fractional share rights (FSRs) give Warren all of the economic benefits of share ownership without owning the underlying share.
If Warren continues to make further fractional investments in “BTI” and ultimately ends up buying the remaining percentage of a whole “BTI” share, the CFD contract is closed out and the whole share is issued to Warren.
Holders of fractional shares will not have voting rights for the fraction of a share owned. Fractional shares are not transferrable. If you close your account or transfer your account to another firm, the fractional share portion of your holdings will need to be liquidated – standard transaction fees apply.