Must-Read for Small Investors | How to Successfully Sell Fractional Shares? Complete Analysis of Trading Hours, Fees, and Risks of Unsold Over-the-Counter Shares

Why Micro-Share Trading Has Become a New Choice for Small Investors

In recent years, micro-share trading has become an entry method for many investors with limited funds. Compared to whole shares (1000 shares per lot) which often require tens of thousands of dollars, micro-shares can be purchased starting from just 1 share, significantly lowering the entry barrier. However, many novice investors overlook an important issue: micro-shares are easy to buy but hard to sell, especially for stocks with low trading volume, which can lead to the dilemma of being unable to sell over-the-counter (OTC) stocks.

What exactly are micro-shares? How do they come about?

Micro-shares refer to fractional stocks less than 1000 shares, with a minimum trading unit of 1 share. These micro-shares usually arise from two situations: one is when an investor’s order is only partially filled, leaving residual shares that become micro-shares; the other is during stock issuance or dividend distribution, which results in small fragments of shares. The Taiwan Stock Exchange recognizes micro-share trading and has established a complete trading mechanism to meet small-scale investment needs.

Micro-share trading hours and rules: key to capturing trading opportunities

Starting from October 2020, micro-share trading expanded from purely after-hours trading to include intraday trading, greatly enhancing liquidity. Understanding the correct trading hours is the first step to successfully selling micro-shares:

Intraday trading period: from 9:00 a.m. to 1:30 p.m., investors must place orders online (phone orders are not allowed). The matching rule is to pair orders via a call auction every minute, with the first match at 9:10 a.m. The order matching follows the principles of price priority, and if prices are the same, then by order time.

After-hours trading period: from 1:40 p.m. to 2:30 p.m., both online and phone orders are permitted. The exchange conducts a single call auction at 2:30 p.m., and any unfilled orders are automatically canceled—they will not carry over to the next day.

It is important to note that unfilled orders during intraday trading will not automatically roll over into after-hours trading; investors need to resubmit their orders.

Micro-share trading fee structure: how to correctly calculate commissions

The commission for micro-shares is calculated the same way as for whole shares, at 0.1425% of the transaction amount. However, each broker sets a minimum fee (usually 1 NT$) and offers discounts for online orders.

For example, purchasing 200 shares of TSMC (assuming current price of 1065 NT$): Transaction amount = 200 × 1065 = 213,000 NT$ Basic commission = 213,000 × 0.1425% = 303.53 NT$

If the broker offers a 50% discount, the actual fee drops to 151.77 NT$. Different major brokers offer varying levels of discount—Fubon Securities and E.SUN Securities provide discounts as low as 18% to 20%, while Shin Kong Securities offers a 10% rate. Investors should compare and choose accordingly.

Are micro-shares easy to sell? Hidden concerns behind low liquidity

Micro-share trading volume is far lower than that of whole shares, which leads to difficulties in selling less popular stocks. When placing sell orders during intraday trading for stocks like XinShen (1582.TW), traders often cannot fully execute due to insufficient buy-side volume. For investors holding OTC or extremely obscure securities, this risk is even more pronounced—OTC stocks themselves have sparse trading volume, and combined with micro-share trading restrictions, it creates a double dilemma of being unable to sell OTC stocks.

In such cases, investors need to adopt proactive strategies.

Practical tips for selling micro-shares when liquidity is low

Strategy 1: Convert micro-shares into whole shares

When micro-shares are difficult to sell, the most effective method is to accumulate enough to make a full lot of 1000 shares. For example, if an investor holds 700 shares but cannot find a buyer, they can purchase an additional 300 shares to reach 1000, then sell the full lot in the more liquid whole-share market. Although this involves extra costs, whole shares have much higher liquidity and a significantly higher chance of successful sale.

Strategy 2: Use after-hours call auction pricing techniques

During after-hours trading (at 14:30), since there is only one matching opportunity, following the principle of maximizing transaction volume, investors who want to sell quickly can try placing a limit order at the lower limit price (跌停價), which has the highest probability of being matched. Conversely, if buying, they can set a limit order at the upper limit price (漲停價). However, this method carries higher risk of executing at an undesirable price.

Strategy 3: Place multiple orders and manage timing

For OTC stocks that are difficult to sell, investors should consider splitting their orders across intraday and after-hours sessions, observing real-time execution, and adjusting prices accordingly. If a certain price level receives no bids during one session, proactively lower the price in the next session.

Pros and cons of micro-share investing

Advantages:

• Extremely low capital requirement, with a minimum of NT$1000 to start
• Suitable for dollar-cost averaging and risk diversification
• Easy to “test waters” and explore individual stocks

Disadvantages:

• Poor liquidity, especially for obscure stocks, risking inability to sell
• Fixed commission rates make small transactions relatively costly (e.g., a NT$1000 transaction may incur a minimum NT$20 fee, which is 2%)
• OTC and ultra-obscure securities face fundamental liquidity shortages
• Only sell orders are allowed; buy orders cannot be placed, limiting trading flexibility

Other options for small investors

If concerns about liquidity and high transaction costs persist, Contract for Difference (CFD) trading offers an alternative. CFDs do not require holding physical stocks; they only trade the price difference, with margin requirements typically around 5%. For example, buying 5 shares of Google stock would cost about US$2000 in actual stock, but through CFDs, it might only require US$100. However, CFDs are more suitable for short-term trading; holding positions overnight incurs interest costs, which contrasts with the long-term holding nature of micro-shares.

Conclusion

Micro-share trading opens the door for small investors to participate in stock markets, but poor liquidity and OTC sellability issues remain significant challenges. Investors should carefully evaluate the trading volume of their target stocks before trading, employ techniques like converting micro-shares into whole shares and using call auction pricing strategies to improve chances of execution, and remain calm to avoid over-conceding just to complete a trade. As experience and capital grow, gradually shifting to whole shares or other derivatives can help build a more comprehensive investment portfolio.