Information on fractional share execution post-PS21/20 best execution transparency

Reference Case Number: FOI2026/00944

Freedom of Information: Right to know request:

I am a retail investor with an interest in understanding how the UK's regulatory framework governs order execution transparency following the departure from EU MiFID II requirements under PS21/20.

1. The total number of UK-regulated investment firms currently registered as Systematic Internalisers with the FCA, and whether this register is published in a form accessible to retail clients.

2. Since the removal of the RTS 28 annual best execution reporting obligation for UK firms under PS21/20 (effective December 2021), what alternative transparency mechanism, if any, does the FCA require UK investment firms to provide to retail clients regarding the identity of execution venues used for their orders — specifically for fractional share transactions executed exclusively through a firm's own SI or connected group entity?

3. Where a UK-regulated firm acts as principal through its own Systematic Internaliser for fractional share orders — purchasing securities into its own inventory to fulfil client fractional entitlements — what regulatory requirement, if any, governs the frequency and method by which the firm must reconcile total client fractional entitlements against actual whole securities held in its inventory or nominee account?

4. Whether the FCA has conducted any thematic review, supervisory assessment, or internal analysis of the client asset protection implications specific to fractional share holdings — particularly where those holdings are executed and held through a firm's own SI rather than on a lit exchange — and if so, whether any output or summary of that review is held and disclosable.

5. Whether, following PS21/20, the FCA has assessed whether the removal of RTS 28 reporting requirements creates a transparency gap for retail clients in understanding where and how their fractional share orders are executed, compared to the continued EU obligation under MiFID II.

I am asking as someone genuinely interested in understanding how market structure regulation works in practice, particularly the mechanics of zero-commission broking and how retail order execution is governed in the absence of the transparency obligations that existed pre-2021.

FCA response:

Question 1

The information you have asked for is publicly available and can be obtained on the FCA Website here: Resources[1]. Please navigate to the DRSP, MTF, OTF, SI and DR Register to see a list of registered Systematic Internalisers.

Question 2 & 3

We would like to explain that we consider questions 2, 3 and 5 to be requests for general explanations of policy and advice on our regulatory approach. As you may be aware, Freedom of Information Act, FOIA concerns ‘recorded information’, and should not be used to provide explanations or respond to general questions. Such an exercise would be tantamount to creating new information, something under FOIA that we are not required to do.

By way of context, Regulatory Technical Standard 28 (RTS 28) was not historically applied to fractional shares.

We have not introduced a new transparency mechanism relating to execution venues since the removal of RTS 28. As detailed in PS 21/20[2], the deletion of RTS 28 reports was broadly supported across the sector. We did not consider that the reports were delivering their intended objectives and increased unnecessary costs for trading firms. This was strengthened by feedback that very few consumers were using the reports.

Despite this, we are continuing to monitor this issue, and we are intending to revisit it as part of our joint work with the Treasury on the Wholesale Markets Review.

Further information on our approach to fractional shares can be found here: Expectations of firms offering fractional shares to retail investors | FCA[3].

In relation to question 3 of your request, where a firm purchases whole securities into its own inventory as principal and allocates fractional entitlements to clients, those client entitlements will typically constitute custody assets even where the legal title to whole shares remains with the firm or its nominee. This means the firm must apply the standard CASS 6 reconciliation framework whereby the firm must determine an appropriate reconciliation frequency having considered the factors under CASS 6.6.44R.

Further details on the CASS 6 custody rules can be found here: FCA Handbook - CASS 6 Custody rules[4].

Question 4

We can confirm that we have not conducted any thematic review, supervisory assessment or internal analysis of the specific criteria of your request. We have conducted broader analysis on fractional investments as part of our work on expanding consumer access to investments. Our discussion paper on the topic, published in December 2025, can be found here: DP25/3: Expanding consumer access to investments[5].

The aim of this paper was to gather views on our consumer investment rules. We had observed significant changes in how retail investors access and engage with investments and wanted to engage industry on how we take account of such changes in our regulatory framework.

As part of this work, we looked at fractional investments (paragraphs 2.10-2.14). We wanted views on the risks of such investments, and how respondents felt they should be treated in our rules. We are currently reviewing responses to this discussion paper to help us consider any future work related to fractional investments.

Question 5

As mentioned above, RTS 28 did not historically apply to fractional shares. We therefore have made no assessment as to the creation of a transparency gap.

Date of Release: 28/05/2026

Information on fractional share execution post-PS21/20 best execution transparency - May 2026