The US FinancialIndustry Regulatory Authority (FINRA) reminded member firms this week that newfractional share reporting requirements take effect February 23, givingbroker-dealers just over five weeks to comply with technical changes designedto capture granular trading data that current systems cannot handle.FINRA firstannounced plans for the reporting overhaul in March 2024, acknowledging that while firms canexecute fractional share transactions, the organization's Trade ReportingFacility, Alternative Display Facility, and OTC Reporting Facility don'tsupport entering fractional quantities. Undercurrent guidance, trades involving 100.5 shares get rounded to whole numbers,obscuring the actual transaction size.Retail Trading SurgeDrives Reporting ChangesFractionalshare trading has reshaped how retail investors access equity markets,particularly for high-priced stocks that were previously out of reach forsmaller accounts. The global fractional investing market reached $14.3 billionin 2025 and analysts project growth to $66.3 billion by 2032, expanding at acompound annual rate of 24.5%.Researchshows fractional trading triggered a surge in tiny trades among expensivestocks after major brokers introduced the capability. When, for example, Swissquoteenabled fractional trading in October 2024, the Swiss broker became one of the last majorretail trading platforms to join the pack, catching up with industry leaderslike Robinhood and Charles Schwab in offering access to stocks priced at $200or more for investors with as little as $5 to deploy. Data fromQ3 2025 indicates 45% of retail investors now hold fractional shares in theirportfolios.The trendgained momentum during the COVID-19 pandemic, and since then a wave of firmshave rolled out fractional trading, includingXTB, Interactive Brokers, Saxo Bank, Webull, RoboMarkets,and many others. Brokers report higher trading volumes and deeper clientengagement when customers can diversify across more securities without needingfull share prices.Brokersreport higher trading volumes and deeper client engagement when customers candiversify across more securities without needing full share prices.Dual Reporting FieldsReplace Single Entry SystemStartingnext month, firms must populate two separate fields when reporting fractionaltrades. The existing "Quantity" field will continue to show wholenumbers, but a new "Fractional Share Quantity" field must capture thecomplete transaction amount, including up to six digits after the decimalpoint.A trade of100.573278 shares, for example, requires entering "100" in thequantity field and "100.573278" in the fractional field. Tradesinvolving only whole shares should leave the fractional field blank. Submissionsshowing whole numbers in the fractional field without decimal components willbe rejected.Thereporting requirements address an edge case that could otherwise createregulatory gaps. When a transaction involves less than one share and truncatingto six decimals would yield zero - such as a trade of 0.0000004 shares - firmsmust report "0.000001" in the fractional field and "1" inthe quantity field. But if amulti-share trade includes a fractional component smaller than six decimals,like 100.0000004 shares, firms should report it as 100 whole shares and leavethe fractional field empty.Phased Rollout Begins WithNMS StocksTheFebruary 23 implementation covers only NMS stocks, securities listed onnational exchanges like NYSE and Nasdaq. FINRA will announce a separateeffective date for OTC Equity Securities, creating a phased approach that givesfirms time to update systems across different asset classes.Firms thatdon't engage in fractional trading face no reporting changes and can continuesubmitting data exactly as they do now. The National Securities ClearingCorporation doesn't currently support clearing fractional share trades, so anyreport submitted with both a fractional component and clearing status will berejected.Theregulatory framework for fractional shares continues evolving acrossjurisdictions. Cyprusfinancial regulator CySEC issued guidance in September 2024 clarifying whenfractional investments qualify as direct share ownership under MiFID II,addressing questions about how investment firms should classify these products.A trend forbrokers in 2026 may be even stronger. Research in the UK has shown that one infive adults wants to start investing this year with small amounts, beginningat £10–£50 per month. Fractional shares are particularly well suited tothis approach.This article was written by Damian Chmiel at www.financemagnates.com.