Following the recent drastic changes to trade pricing from Interactive Brokers that took the market by surprise, the broker has announced it will now offer fractional stock trading to investors. This allows the broker to attract a younger client base and for traders to purchase fractions of a tradable stock, rather than whole units.
In this case, Interactive Brokers is not first to market with such an account feature, as Charles Shwab began offering such trading conditions previously. Nonetheless, the fact that fractional equity trading is being adopted signals that the OTC trading market is set for more competitive disruptions in the future as brokers compete for new demographics and customer segments.
It will be interesting to see if all other major equity trading players follow suit in this regard and how such fractional trading will impact revenue per million (RPM) for the brokers themselves.