Practical Guide to Selling Fractional Shares: Understand Everything from Trading Hours to Execution Techniques

For small investors, selling fractional shares has become an essential part of financial planning. Since Taiwan’s stock exchange opened intraday fractional share trading on October 26, 2020, the flexibility of fractional share transactions has greatly improved. Today, investors are no longer limited to after-hours trading; the mechanism for selling fractional shares has become more transparent and convenient. This article will introduce you to the core knowledge and practical techniques for selling fractional shares.

What Are Fractional Shares and Their Selling Background

Fractional shares refer to portions of stocks less than one full lot (less than 1,000 shares), with the minimum trading unit being 1 share. These fractional shares often originate from unfilled orders, stock distributions, or long-term holdings that result in fractional holdings. Compared to trading whole lots, fractional shares lower the investment barrier, allowing investors with limited capital to participate in the stock market.

However, selling fractional shares presents unique challenges. Due to lower liquidity and fewer participants, investors may encounter difficulties in executing sales or longer waiting times. Therefore, understanding the trading rules and techniques for selling fractional shares is especially important.

Mastering Trading Hours for Fractional Share Sales to Improve Success Rates

Selling fractional shares mainly occurs during two trading periods. Investors should choose flexibly based on different situations:

Intraday Selling Period (9:00 AM to 1:30 PM)

During this period, investors can submit electronic sell orders via brokerage trading platforms. The system conducts the first matching at 9:10 AM, followed by periodic batch auctions every minute. Orders are matched based on “price priority, then time priority at the same price.”

The advantage of intraday trading is high frequency and more opportunities for execution. If an order isn’t filled during the day, the unfilled portion will not automatically carry over to after-hours trading; investors need to resubmit the order during the after-hours session.

After-Hours Selling Period (1:40 PM to 2:30 PM)

The after-hours session offers more flexible order placement. Investors can place orders via electronic trading, phone, or in person at the branch, including manual orders. Unlike intraday multiple matches, after-hours trading only conducts one final batch auction at 2:30 PM. Unfilled orders are automatically canceled and will not carry over to the next day.

Order matching during after-hours also follows the “price priority” principle, but at the same price, orders are randomly ordered by the system rather than by submission time.

Cost Structure of Selling Fractional Shares: What Are the Fees?

Similar to whole-lot trading, selling fractional shares involves a fee of 0.1425% of the transaction amount. However, actual costs are often higher due to two main reasons:

Minimum Commission Fees

Most brokerages set a minimum fee ranging from NT$20 to NT$1. This means that even if you sell a small amount of fractional shares, you still pay at least the minimum fee. For example, selling 100 shares at NT$100 each results in a fee of NT$100×100×0.1425% = NT$14.25, but if the minimum fee is NT$20, you pay NT$20.

Discount Promotions

Different brokerages offer varying discounts for online orders. Major brokers’ promotional rates for fractional share sales are approximately: Fubon Securities (1.8折), Yuanta Securities (2折), Shin Kong Securities (1折), Uni-President Securities (1.68折), KGI Securities (6折). Choosing a broker with a larger discount can significantly reduce trading costs.

To maximize returns, investors should sell in sufficient quantities (generally over 100 shares) to lower the proportion of fees. For example, selling 500 shares at NT$200 each:

• Sale amount: 500×200 = NT$100,000
• Fee at 0.1425%: NT$100,000×0.1425% = NT$142.50
• With a 2折 discount (20%): NT$142.50×20% = NT$28.50

Price Strategies and Techniques for Selling Fractional Shares

Logic of Selling at Limit Down Price

Since after-hours fractional share sales only involve a single batch auction, investors can consider placing a limit order at the limit-down price if they need to sell quickly. The batch auction follows the “maximum volume” principle, so placing a sell order at the limit-down price can greatly increase the chance of execution. This technique is especially useful for stocks with low liquidity.

Ultimate Strategy: Converting Fractions to Whole Shares

When fractional shares cannot be sold for a long time, investors can consider “converting fractions into whole shares.” For example, if an investor holds 700 shares of a less liquid stock, they can buy an additional 300 shares to reach 1,000 shares (one full lot). Then, they can sell the entire lot via more liquid whole-lot trading. Although this involves additional investment in the short term, the efficiency and price realization of whole-lot trading are generally better than selling fractions, often allowing for a more favorable sale.

Gradual Selling with Patience

For less popular stocks, investors can adopt a staged selling approach. Submit orders during both intraday and after-hours sessions at different times to increase the chances of execution. For long-term holdings not urgently needing cash, patience can often lead to better prices.

Liquidity Challenges in Selling Fractional Shares

The biggest obstacle in selling fractional shares is low liquidity. For less popular stocks, fractional trading volume is sparse; investors may find it impossible to execute during the day or even during after-hours batch auctions. At such times, investors face a dilemma: wait patiently or accept less favorable prices.

Assessing Stock Liquidity

Investors can observe buy and sell volumes through the intraday fractional share market display system. If sell orders far exceed buy orders, it indicates poor liquidity, and selling may be difficult. In such cases, investors should prepare psychologically and consider more aggressive pricing strategies (like limit-down orders) to increase the likelihood of sale.

Rational Evaluation of the Pros and Cons of Selling Fractional Shares

Core Advantages

Selling fractional shares allows small-capital investors to liquidate flexibly without needing to hold a full lot. This is especially convenient for those who need temporary funds. It also ensures liquidity, preventing capital from being overly tied up.

Main Disadvantages

First, the transaction fees for fractional shares are relatively high, especially when selling small amounts. Second, the timing of execution is uncertain, potentially requiring several days to complete. Third, the selling price of fractional shares is usually less favorable than whole lots, especially for stocks with poor liquidity.

Summary: Rational Approach to Selling Fractional Shares

Selling fractional shares has become an important part of Taiwan’s small-investor ecosystem. By mastering trading hours, understanding fee structures, and applying price strategies, investors can significantly improve the success rate and efficiency of selling fractional shares. However, it is especially recommended for medium- to long-term investors as a tool for periodic cashing out; frequent trading may offset gains due to fees and price differences.

Before selling fractional shares, investors should evaluate the stock’s liquidity, develop a clear selling plan, and adjust strategies flexibly based on market conditions. Remember, patience and rationality are key to successful fractional share sales.