As with all other assets on our platform, Bitpanda also offers fractional investing for stocks and ETFs - as the only platform in Europe!
This feature is made possible through a structure called a derivative contract. It works as follows: Bitpanda purchases stocks and ETFs and holds them securely with a custodian bank.
Based on this portfolio, Bitpanda issues fractional shares (derivative contracts) to users. You can therefore invest any amount you like, and 100% of the underlying assets are safely held at our custodian.
Derivatives are therefore structures enabling you to invest fractionally in stocks and ETFs. Technically speaking, derivatives are financial instruments whose value is based on an underlying asset.
Here is everything you need to know regarding stock and ETF derivatives:
- As the owner of a derivative, you participate in the increase or decrease of an asset’s value, as well as in financial advantages or disadvantages resulting from corporate actions, a dividend payout for example. Other rights (or obligations) resulting from the ownership of assets are not transferred to you
- The value of your derivative is 1:1 dependent on the value of the underlying asset
- Bitpanda owns all underlying securities and holds them securely at a custody bank
- The derivative can only be bought from and sold to Bitpanda. Any sale, transmission or other transfer to anyone else is not possible
In case of an extraordinary corporate action event, Bitpanda will assess any arising situation on behalf of its users. Holders of derivatives will be informed in a timely manner about the action, as well as any potential consequences.