Not sure what to buy for Christmas? Now you can buy a % of a share, e.g. $20 of either Amazon, Apple, Facebook, Google or Tesla, as opposed to buying a whole share in any of these companies. FTX, based in Hong Kong, is an exchange that offers trading in cryptos and derivatives and now enables clients to buy a % of certain shares, as opposed having to buy whole shares. This is particularly useful for those shares which have a high nominal price such as Amazon, whose share price is over $3,000. Buying part of a share is not new since fractional share buying has been possible if dealing through platforms such as Stockpile, Robinhood, Betterment and Stash Stockpile, which all allow fractional investing.
But who would have thought that you would witness the USA being classed alongside countries such as Syria, Iran and North Korea as being banned as the FTX exchange refuses to deal with Americans who would like to get exposure to some of the most successful tech stocks in the USA? Uncle Sam - you need to look at your regulations since, increasingly, you would appear to be no longer the "Land of the Free"....
Buying some, not all of a share
In the UK, if you wanted to buy £100 of Berkshire Hathaway (run by the legendary investors Warren Buffet) it is almost impossible since, if you were to use a traditional stockbroker, the current share price is over £222,000. However, there are other trading platforms that do enable you to buy a fraction of a share such as Berkshire Hathaway broker such as eToro, Plus500 or Trading -212. The UK share trading platforms eToro and Plus500 (as well as Robinhood in the US) have all been hugely successful and taken considerable trading volumes from traditional stockbrokers. These trading platforms have been long term advocates of helping to educate and allow clients to get exposure and trade crypto currencies in different formats.
The aforementioned platforms, together with exchanges such as FTX, allow investors to trade 24/7 in a selection of assets - cryptos, shares, derivatives and even betting on the outcome of the matters such as the US election. The digitalisation of assets, such as IBM has recently done by issuing $1.6 billion of Thai government bonds or by enabling existing assets e.g. equites in Tesla, Apple etc. that FTX now offers, will potentially transform our existing capital markets. A likely driver for greater digitalisation of assets could well be the fact that improved risk management, stronger compliance controls and monitoring can be achieved. It is not simply within the trading of securities that we are going to see disruption, as according to Deloitte, “Blockchain technology has the potential to wipe Luxembourg off the map of fund distribution and administration market.”
A powerful combination of lower trading costs, greater transparency and less risks for capital markets and the asset manager is sure to attract attentions of the boards of banks, insurance firms and fund managers (as well as regulators) as they collectively begin to understand the benefits of having assets tradable in a digital format.