Fractional Shares Disclosure
DriveWealth’s unique Fractional share program allows you to purchase securities in dollar amounts rather than share quantities. Please be advised that trading in fractional shares has unique risks and limitations that you should understand prior to participation in DriveWealth’s Fractional Share Program.
- Rounding. DriveWealth rounds all fractional holdings to eight decimal places. For all notional based orders, your transaction will never exceed the order amount. Rounding may also affect your ability to be credited for cash dividends, stock dividends and stock splits. For example, if you own 0.00000001 shares of stock that pays a one cent dividend per-share, we will not credit your cash balance a fraction of a cent.
- No Limit Orders. DriveWealth will only accept market orders for fractional shares at this time.
- Trade Capacity and Execution. DriveWealth will comply in all respects with “best execution” on all orders executed through the DriveWealth in line with its regulatory requirements. This means that you will receive the National Best Bid or Offer (“NBBO”) as of the time of your order, for all full share and fractional share components of a transaction. Any order greater than one share that includes a fractional share component will be executed in a mixed capacity. DriveWealth will act in either a principal or riskless principal capacity with respect to the fractional share components of the transaction; DriveWealth will act in an agent capacity with respect to the full share component of the transaction. You trade confirmation will disclose the agent and principal/riskless principal capacities of a mixed capacity trade. If you enter an order solely for a fractional share, DriveWealth will execute your trade against its proprietary account at the then current NBBO. Orders entered outside of regular trading hours cannot be executed.
- Transfer of Fractional Shares. Fractional shares are not transferrable. If you close your account or transfer your account to another firm, the fractional shares held in your account will need to be liquidated. Similarly, Fractional shares cannot be put into certificate form and mailed. Liquidations of fractional shares may result in additional charges.
- Voting Rights. We utilize a third-party vendor, Say Communications LLC (“Say Communications”), for our proxy and shareholder materials delivery and voting application provider, to extend voting rights to holders of fractional shares for fractions of a share owned in brokerage accounts for which DriveWealth serves as clearing broker. When you vote a fractional share of a security, Say Communications will add the fractional position voted by you to the aggregate vote total for all shares of such security reported by Say Communications on behalf of DriveWealth to the applicable vote tabulator (“Tabulator”) for the meeting or shareholder event. A Tabulator is an independent third-party service provider selected to provide vote tabulation services for an issuer’s shareholder meeting or similar shareholder event. Neither DriveWealth nor Say are affiliated with any Tabulators. Each Tabulator may follow differing policies for counting fractional share positions submitted to it for a meeting or shareholder event, and it is therefore possible that a Tabulator may discard fractional positions submitted to it by Say Communications or follow rounding practices, such as rounding down to the nearest whole share, that have the effect of excluding some fractional positions submitted to them from the total number of shares voted. Note that issuers may also not report fractional shares voted at their meeting or shareholder event in the vote totals reported on their Current Report on Form 8-K or otherwise.