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Price adjustments

What are price adjustments?

In the event that a listed issuer of a security (on which you hold an open CFD position with us) announces a share sub-division or share consolidation, or makes changes to its capital structure by way of rights issues, bonus issues or cash dividend payments, we will make an appropriate adjustment on the relevant listed share CFD on the ex-date or the corporate action effective day.

Why am I debited for a price adjustment if I am holding a short position?

As you would have benefitted from the artificial price movement at the time where in fact you shouldn’t have, the equivalent amount is debited from your account in order to offset this. Overall, you do not lose or gain anything due to this price adjustment.

How do company stock splits affect my account?

Stock splits are usually undertaken when the value of a company's stock is becoming too high. The company will essentially offer more stocks in the company but at a lower price. Here's a typical example:

  • You hold 300 units in company Q at a price of 1607 per share
  • Q announces on R date, that it will be issuing a stock split of 5 for 1.
  • Hence for every 1 stock you hold you will be issued 5.
  • Now you will hold 1500 units at the reduced price of 321.4.
  • Note the overall contract value remains the same: (300 units x 1607 = 4821; 1500 units x 321.4 = 4821)

On your daily statement the stock split will appear under 'Ledger Activity' as

Corp Action: Consolidation of ZZZ
X for Y'
(Where ZZZ is the company, X and Y are the terms of the stock split).

How do company dividend announcements affect my trades?

If you have a position on a company which announces a dividend, your account will be credited/debited prior to market open on the day the stock goes 'ex-dividend'. Here's a typical example:

  • Vodafone announces a 15p dividend
  • You currently hold 3000 units of Vodafone (or £30 per point)
  • 15p x 3000 = £450
  • £450 will be credited to your CFD account.
  • (If you hold a short position going into the ex-dividend date, then your account will be debited for the same amount)

Please note, the amount you are credited or debited will be subject to the relevant tax holding rates according to the region in which the share is listed. On your daily statement the dividend will appear under 'Ledger Activity' as:

Corp Action: Cash Dispersion Corp Action:
Cash Disp XXX paying YYY'
(Where XXX is the instrument and YYY is the amount of the Corporate Action).

How will corporate actions be applied to my positions on shares?

Price adjustments may be applied to your account where you are holding positions on relevant CFD shares or cash indices.

How will you adjust my account where I hold positions on cash indices?

When a stock goes ex-dividend, ignoring other market forces, the value of that stock effectively falls by the dividend amount. In most cases this will in turn cause the index value to drop since the value of the index is calculated from the value of the stocks within it. The amount that the index drops is dependent on the weighting of the stock within the index. If more than one constituent stock of an index goes ex-dividend on the same day, we will add the amount of points each stock will cause the index to drop by together to calculate the total dividend amount in relation to the relevant index CFD offered by us.

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