Posted on 07/20/2022 2:33:05 PM PDT by EBH
Now new research released Wednesday has shed light on this trading frenzy and concluded that a change in how Robinhood and other online brokers report fractional trading data was a culprit.
“This volume is due to the interaction of a well-intentioned but misguided FINRA reporting rule, Robinhood trading, and fractional shares,” wrote the authors — Robert Bartlett at University of California, Berkeley, Justin McCrary at Columbia University and Maureen O’Hara at Cornell University.
In 2017, the Financial Industry Regulatory Authority started requiring brokers to report fractional trades — sometimes just 1/100th of a share — as if they were for one whole share, which the authors coined as the “Rounding Up” rule.
The effect of this rule change went pretty much unnoticed until the spring of 2021 when Covid pandemic-driven trading mania by retail investors boosted the use of fractional trading.
With more tiny trades being reported as full shares, trading volumes for many stocks became massively inflated. In Berkshire’s case, the authors said this reported “phantom” volume now represents 80% of the Class A shares’ daily trading volume.
(Excerpt) Read more at cnbc.com ...
This rationale works just as well as Climate Change being the cause.
A whole lot of research and accounting rules go into how to round 0.500000 up or down to avoid a bias. But the idiots at FINRA don’t think rounding every value of 0.01 upward won’t cause a flawed total?
At $429,000 per share a fractional is the only way 99% of investors could buy in.
1/100 is a whole? So a penny is a dollar. #newmath
. . . up and until you pay your taxes
We’re ruled by morons wherever you look. They can trade stock prices to the 4th decimal point, they should be able to track shares the same way.
Berkshire Hathaway has one of the highest per-share price, so you’d expect it to have a high volume of fractional share transactions...
I’m not sure the last time I have heard anyone say with a straight face that anything FINRA does is “well-intentioned.”
That’s the price of the “A” shares; the B shares (ticker BRK.B) are at about $286 today, well within the reach of the average investor.
The quality and diversity of Berkshire’s holdings make them roughly equivalent to a good mutual fund (if you’re looking at value stocks).
Buffett has repeatedly said that anyone who wants to sell their A shares should contact him first; he’s buying.
Robinhood and other micro trading sites sell the trades to flash traders who scrape off every trade. It’s a racket.
The REASON being as always the INSIDER TRADING of Warren Buffett who sits on the boards of these conglomerates? Could it be-— the “genius” of omaha who is ripping off the US everyday with the payoff he gets from Burlington Northern hauling crude oil which SHOULD BE A PIPELINE (and was going to be one until JoeBama got his kick from Buffett to keep him in the tank car bidness. This is a FACT.
And it is exponentially more dangerous to ship by tank cars as well as limiting the amount deliverable every day to do this instead of a top tech pipeline at millions of barrels a day!!
Yay— you da man shriveled up demonrat fraud— Buffett.
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