Fractional Shares are derivative contracts whose performance is linked to the price development of a specific share or ETF as underlying. Fractional shares enable you to indirectly invest in the underlying stocks or ETFs while not needing to purchase whole shares.
So e.g. if an underlying stock has a current market price of €100,- the price of the Fractional Share on that stock will also be €100,-. You can decide which fraction of the underlying stock you want to invest in via the Fractional Share.
By purchasing Fractional Shares you enter into a bilateral agreement with CM-Equity AG. CM-E is the sole counterparty for all claims arising from the Fractional Stocks. Trading of the Fractional Share does not take place on the stock exchange but against CM-E as Counterparty, Over-the-Counter (OTC).
You as the purchaser of a Fractional Shares have no claim to the delivery of the underlying stock or ETF nor any shareholder rights - such as voting rights. The Fractional Shares are perpetual and can be sold to CM-E and terminated at any time during the trading hours of the underlying stock or ETF.
CM-E is a member of the Compensatory Fund of Securities Trading Companies (Entschädigungseinrichtung der Wertpapierhandelsunternehmen, “EdW”). The EdW grants you compensation if CM-E is not able to meet its liabilities from securities transactions. The compensation case must have been determined by BaFin. A claim for compensation exists only if funds are denominated in the currency of an EU member state or in euro and is limited to 90% of the claim or a maximum of €20,000.00