WBS launches ‘watershed’ ETF fractional trading

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WBS launches ‘watershed’ ETF fractional trading

Dealing, custody and settlement specialist Winterflood Business Services (WBS) is to offer fractional trading of exchange-traded funds (ETFs) from July.

The service purports to resolve the problem faced by model portfolio managers whose inability to trade minute amounts of ETFs and other instruments means they are unable to replicate their asset allocation weightings for smaller clients.

Last month, Investment Adviser reported that a working group’s examination of an industry-wide solution to the problem of fractional trading had run in to a number of roadblocks, including legal and operational problems.

WBS believes it may have overcome such barriers, however, with a proposition that allows users to trade and hold ETFs to four decimal places via the firm’s nominee. According to WBS, the service will offer “broad access to the ETF universe, covering a range of markets, indices and alternative strategies”.

The company said its solution would enable platforms, discretionary fund managers and advisers to fully invest into ETFs and ensure these instruments can be used effectively through model portfolios.

Alex Kerry, head of WBS, said: “Both advisers and discretionary managers want to access the low costs and broad exposure that ETFs can provide.

“Through our automation and aggregation services, we have successfully reduced fees and improved access.

“The provision of fractional share dealing is removing a major barrier. We believe this a watershed moment.”