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What is a Fractional Share Right (FSR) on SatrixNOW?

Put very simply, when an investor doesn't have enough money to buy a whole share, Fractional Share Rights (FSRs) give them the ability to invest whatever that sum of money is, in a fraction of that share / security.

Let's explain by way of example:

An investor named Zandile has heard that the Satrix Indi ETF is a great investment. Zandile wishes to contribute R100 toward buying these ETF securities.

On investigation, Zandile discovers that a single Satrix Indi ETF costs R70, so she knows that she can purchase one whole security, but is left confused as to what she should do with the R30 left over from that purchase (R100 - R70 = R30). If she could, she'd also like that R30 invested in Satrix Indi, but wonders if she needs to wait until she has the full amount to buy another whole security?

The answer is no. The clever people at SatrixNOW have devised a way to allow her to invest that R30 in Satrix Indi as well.

How it works:

In order to give effect to her R30 investment (transaction) in Satrix Indi, Satrix enters into a contract for difference (CFD) Transaction with Zandile whereby Satrix acts as a principal and issues Zandile a CFD for a pro-rata percentage of the underlying whole security.

Through that CFD, Zandile will have a contractual claim against Satrix to the economic benefits and risks associated with ownership of the Satrix Indi ETF (price movements and dividends) without having to own the Satrix Indi ETF directly.

In short, fractional share rights (FSRs) give Zandile all of the economic benefits of security ownership without owning the underlying security.

And the beauty of these FSRs is that if Zandile continues to make further fractional investments in Satrix Indi and ultimately ends up with a whole Satrix Indi ETF, the CFD contract is closed out and the whole security is delivered to her.

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