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Fractional Portfolio Trading

Liquidity beyond odd lots
  [vote for,

The idea here is for a derivative trading instrument that derives its value from your specific portfolio in real time, and allows you to increase or decrease its value, I.e buy or sell some portion of it, without altering its makeup, using fractional shares, which are already supported by industry

This would greatly improve liquidity for investors, and there's really no reason other than antiquated settlement rules why stock market makers cannot do simple arithmetic

theircompetitor, Dec 17 2015

wired article http://www.wired.co...itcoins-blockchain/
this open source project aims to build blockchain-like technology that can bring a new level of automation and transparency to a wide range of services in the business world, including stock exchanges and other financial markets. [xaviergisz, Dec 17 2015]

Stockpile apparently lets you routinely buy fractional shares https://www.stockpile.com/
[theircompetitor, Dec 24 2015]


       On a similar note, I was wondering if the block chain mechanism used by bitcoin could be separated from the numerical mining aspect. The block chain could be used to record ownership of more tangible assets like stocks, bonds, commodities, real estate, etc.
scad mientist, Dec 17 2015

       This is more complicated than arithmetic if the securities in your portfolio are equities, then the terms of issue of those equities will apply: ordinarily, you aren't permitted to sell a half a share, primarily because then your voting right is split. Many other tradable securities are issued on an basis but I don't know enough about nonequity securities to say whether the framework suggested might work elsewhere.
calum, Dec 17 2015

       Right calum, thus derivatives, though we already get fractional shares through dividend reinvestment
theircompetitor, Dec 17 2015

       Huh, I completely missed the key word the first time through, apologies. Re fractional shares on scrip dividends: my experience on the equity investment management was strictly UK and a decade plus ago, so more than likely to be wrong. P sure it's not a goer in the UK corporate regime, though.
calum, Dec 17 2015

       Would this not make you a fund manager, and your portfolio the fund?
bungston, Dec 17 2015

       kind of, but I'd be interested in every customer being able to do it.
theircompetitor, Dec 17 2015

       kind of, but I'd be interested in every customer being able to do it, and being able to do it in real time, which funds are not even close to. It's as if you could trade an ETF of your own portfolio.
theircompetitor, Dec 17 2015

       Who's the counterparty on this trade?
pertinax, Dec 18 2015

       //Who's the counterparty on this trade?//   

       Box options?
Voice, Dec 18 2015

       the market maker can be the counter party, they are on most trades anyway
theircompetitor, Dec 18 2015

       That was true in the 1980s, before automatic trade-matching systems. Are you sure it's still true now?
pertinax, Dec 19 2015

       Given the smorgasbord of ETFs on the market nowadays, I think that this idea doesn't have much utility as an investment tool. But, what if something like this could be used as a currency for daily transactions?   

       The problem that I have with Bitcoins is that they are backed solely by hype, even though there are a finite number of them in existence. The same is true of gold, although Man's desire for shiny things has remained constant throughout history. Still, when you buy gold, you're assuming that people are going to want gold at some point in the future, even though it doesn't have that much industrial use compared to other metals.   

       Compare both of those to the American Dollar. Though it can be devalued at will by the Federal Reserve, it is still backed by the might of the American army, who will mercilessly crush any tinpot dictator who has the bold idea of selling his oil or his bananas for gold or some alternative currency. The dollar is also backed by the IRS, who only accepts payment in Dollars.   

       But, what if your "currency" were just a basket of stocks. Not "backed" by stocks, but *literally* the fractional ownership of thousands of large corporations. Or, instead of stocks, perhaps a basket of futures contracts for commodities. This is the ideal currency, because it is backed by real labour and capital. A century ago, it would not have been feasible to trade stocks for furniture or groceries, but in the era of instant electronic communication, it is certainly possible for anyone with an internet connection (which is nearly everyone in the developed world) to do business with these new stock-bucks.   

       In fact, there could be competing brands stock-bucks managed by several large corporations, and even if a store doesn't price its goods in that specific currency that your card is loaded with, currency conversion can be automatically performed at checkout.
Cuit_au_Four, Dec 19 2015


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