No. of Recommendations: 8
You smart folks probably realize this already, but the reported trading volume for A-shares is not even close to reality. ...Maybe the smart folks knew this, but I didn't.
I knew the figures were not reliable, but I thought it was related to after-market reporting of crossed shares and weird stuff like that, which would be a much smaller issue.
If it's fractional shares, the trend is just measuring the relative popularity of fractional share trading.
But the odd thing is how volume in fractional shares is [supposed to be] reported.
From the FINRA web site:
Q101.14: How should a trade for a fractional number of shares, for example, 100.5 shares, be reported?
A101.14: When reporting a trade for a fractional number of shares, firms should delete the fraction and report the whole number, except if the whole number would be 0 (zero). If the whole number would be 0, firms should round up to 1. Thus, for example, for a trade of 100.5 shares, the reported quantity would be 100. Trade reports with a share quantity containing a decimal or a fraction will be rejected. (See also, e.g., OATS FAQ T69.)
Q101.15: Must trades for less than one share be reported?
A101.15: Yes. As noted in FAQ 101.14, where a trade is executed for less than one share, e.g., 1/3 share, firms should round up and report a share quantity of 1.https://www.finra.org/filing-reporting/market-tran...So...any fractional-share trade for 0 < N < 1 of the A shares gets reported as 1 full A share of volume !?
Note that this is at the individual trade level, not the total by broker.
If that were to be applicable, the reported A volume could be expected to explode if fractional share trading becomes even very modestly popular.
For a sense of scale, the current reported daily total volume would equate to a typical dollar volume of around $3.4bn lately.
Definitely dubious.
cf. the implied ~$600m in 2021 or ~$100m in 2018.
Jim
