Updated Terms for Payments in Fractional Shares

Please be advised that Alpaca will begin paying out fractional shares in the event of a stock split, effective August 2nd, 2021. As part of our ongoing efforts to help provide world-class brokerage services and APIs, Alpaca is removing cash-in-lieu transactions. With this change, we aim to reduce customer confusion around stock mergers, acquisitions, and splits. We’re able to offer this innovative solution due to the development of our native Fractional Shares API.

What is cash-in-lieu?

Cash in lieu is the action that takes place when a stockholder is paid the cash equivalent of fractional shares when that stock is consolidated or restructured. In other words, the stockholder receives the monetary market value of the fractional shares in place of the fractional share units.

How does this affect me?

Common situations where cash in lieu is distributed include mergers and acquisitions, stock splits, and spin-offs, which can generate fractional shares. A company could either distribute the fractional shares, round up to the nearest whole share, or pay cash in place of fractional shares.

In your Alpaca brokerage account, you will see fractional shares under your positions and activity.

If you have any questions or feedback, please get in touch with us at supports@alpaca.markets. As always, thank you for using Alpaca.

Alpaca does not make recommendations with regard to fractional share trading, whether to use fractional shares at all, or whether to invest in any specific security. A security’s eligibility on the list of fractional shares available for trading is not an endorsement of any of the securities, nor is it intended to convey that such stocks have low risk. Fractional share transactions are executed either on a principal or riskless principal basis, and can only be bought or sold with market orders during normal market hours.

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