Brokers are a key variable in whether a reverse split round-up will turn out profitable. No two brokers process them in the same way. So, I can’t possibly cover every broker, but I can mention the ones I avoid and why. I can also mention the ones I do use.

Avoiding brokers that charge processing fees

I avoid brokers that charge fees for processing reverse splits because they can lose me more than the value of the stock. Fortunately, whether they’ll do this is easy to find. Each broker provides a fee table that completely lists how much they’ll charge for what. This includes reverse splits, which are categorized under “mandatory reorganizations” by the DTCC (pdf, see page 22). So, for example, Fidelity charges nothing (see “Fee Information” > “Investment Specific”), but TD Ameritrade charges $38 (“Service Fees” > “Reorganization”).

Staying wary of brokers with fractional shares programs

While I absolutely appreciate fractional share programs for the access to high-priced stocks that they’ve offered to retail investors, they may just be the death knell for reverse split round-up opportunities. Brokers that offer fractional shares have the opportunity to truly deposit a fraction of the merged, post-split share into your account. In that case, they wouldn’t have to round up. I’ve seen Robinhood and tastytrade do it on and off, but I continue to use them. On the other hand, Alpaca, a broker that had always catered to algorithmic traders, announced that they would always do it. If either Robinhood or tastytrade appear to be following suit, I’m ready to drop them.

Brokers I continue to use

Besides those exceptions, I continue to use a handful of brokers that still try to respect the letter of the reverse split (most of the time!) and also don’t charge for them. Between the rise of zero-commission trading and the subsequent rise of fractional share trading (all while companies continue to tolerate rounding up), I have to wonder how long these opportunities will last, but I hold one account for round-up trading with each of the following brokers.

  • Schwab
  • Merril Edge
  • Tradier – has reverted from zero-commission to a $0.35 commission as of April 2024, but using them is still worth it
  • Robinhood – has deposited fractional shares before
  • tastytrade – has deposited fractional shares before, and further they remained unsellable because the UI only worked in whole shares
  • Webull – has a minimum order size of 100 or 1000, so I always buy 100 then sell 99 or buy 1000 then sell 999, using a cash account (not a margin account!) to get around day-trading restrictions

Here’s the brokers that I no longer use but still know to useful for trading reverse splits as of June 2024.

This certainly isn’t a complete list. Also, none of these links are referral links: I’m not accepting any compensation of any kind for this information, nor am I guaranteeing that it will be forever correct. As Alpaca had shown, brokers change their policies. The only thing I can say is that I’m also trading on this information, and I’ll try to update it as soon as I notice anything.