Retail Stock Trading Conditions

What is a Corporate Action?

A corporate action is an event initiated by a company that has a direct impact on its shareholders. Dividends & other forms of capital return, stock splits, share consolidations, mergers & acquisitions, and equity raises are all examples of corporate actions.

When a corporate action occurs, a price and/or cash and/or trade adjustment may be applied to your trading account in order to fully reflect the impact of this event.

Margin requirements may be subject to change ahead of any corporate action, including any which may or may not be announced in earnings/results statements or company trading/AGM updates.

Example: CFD Stock Split

Amazon announces a 5 for 1 stock split.

The number of shares and the trading prices would be adjusted by the announced ratio.

Pre stock split open position:

5 share of Amazon sold at 100 USD per share

5 shares of Amazon sold at 200 USD per share

The total value of the position = (5 shares x 100)+(5 shares x200) = 1,500 USD

The original positions would be closed at the respective opening prices.

As the split is a 5 for 1 ratio, we would multiply the current total number of shares by a factor of 5 to give new total shares:

New total shares = 10 total shares x 5 = 50.

The total value of the position (1,500 USD) is divided by the number of new total shares (50) to give a new opening price:

New opening price = 1,500 ÷ 50 = 30 USD per share

Post stock split open position:

50 shares of Amazon sold at 30 USD per share

The total value of the position remains the same at 1,500 USD

Example: Dividend adjustment on an index CFD

Dividend adjustment × Contract size × Volume (lots)

Calculation:

0.0183 × 1 contract × 1 lots = 0.0183 (posted amount in MT4 0.02 USD)

No corporate actions expected for this week.