Winterflood Business Services (WBS) has announced it will offer trading and custody of fractional shares on exchange-traded funds from July this year.
Alex Kerry, Head of Business Services, Winterflood.
WBS is thought to be the second firm in the UK to offer fractional share trading, following online investment manager Nutmeg who announced at the end of March it would enable investors to hold positions as little as one pence in any ETF as opposed to whole shares.
According to a press release from Winterflood the new service will allow ETFs to trade at four decimal places. The move is expected to help platforms, discretionary fund managers and financial advisers to fully invest into ETFs and ensure they can be used effectively through model portfolios.
The move will help smaller investors enter the market and is expected to open up access for more discretionary fund managers and financial advisers who have previously been impeded by a lack of access, high transaction charges and the absence of fractional share dealing.
Alex Kerry, head of WBS, said: “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.”
“With increased understanding of the benefits ETFs can provide to underlying clients and the wider trend for passives, there are now real signs the ETF market is poised to take off. We are already seeing some advisers and discretionary fund managers keen to substitute some funds for ETFs, when comparable in terms of access and cost,” Kerry said in a statement.
Joe Parkin, Head of iShares UK Wealth Sales at BlackRock, added: “ETFs continue to challenge the status quo when it comes to investing. There is a clear trend towards investors wanting to use ETFs to manage their portfolios and invest their regular savings, and this service will level the playing field with other investments – empowering investors and their advisors to buy and sell ETFs seamlessly and cost effectively. This is a big deal for the UK investment industry.”
WBS’s offering includes broad access to the ETF universe – covering a wide range of markets, indices and alternative strategies. The new service will also undertake best execution requirements, transactional reporting and regulatory compliance. Custody of assets will carry all necessary CASS 7 permissions.