On 9 April 2025, the European Securities and Markets Authority (ESMA) published a letter from its chair to Maria Luís Albuquerque (Commissioner for Financial Services and the Savings and Investments Union, DG FISMA) regarding the qualification of fractional shares under the Markets in Financial Instruments Directive II (MiFID II).

ESMA is bringing this issue to the European Commission’s attention so that it may consider how to best to provide clarity on the qualification of fractional shares.

The letter includes the following points:

• Neither MiFID II nor the Markets in Financial Instruments Regulation (MiFIR) provides for a definition of shares or fractional shares and in consequence such instruments are defined and governed by national or case law.
• An instrument might be classified as a derivative in one Member State and as a share in another, undermining regulatory consistency and investor confidence.
• In 2023 ESMA issued a public statement covering those instances in which fractional shares are structured as derivatives.
• A consistent classification would help firms that want to offer fractional shares across the EU by eliminating barriers arising from national law and fostering a level playing field. Moreover, such an approach would also strengthen the integration of markets and support the objectives of increased retail participation.
• ESMA believes it would be helpful to clarify that fractional shares replicating the key characteristics and trading environment of shares should remain subject to the rules applicable to shares under MiFIR.