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SHARED PROFITS FOR STOCKS & INDICES

Learn more about the dividends here and how it affects your trade

WHAT IS DIVIDEND?

Some companies share a portion of their periodic incomes with their
shareholders. These are called dividends and they are attractive incentives for
investors; seen as a sign of a profitable fiscal year.

Investors receive dividends based on the amount of shares they own. Once the
company announces the decision for paying it out, a specific day called the ex-
dividend is set. Anyone who owns shares before this point is eligible for dividend.

But what about traders? Are CFD traders affected by dividends if they are trading stocks or indices? The answer is yes. Even though traders do not actually own the shares of the company, dividends dramatically change a stock CFD’s price on markets.

HERE IS AN EXAMPLE:

You have a long position with 100 shares of Apple and a $0.07 dividend is declared. You kept the position open throughout the ex-div date. So, you receive $7 (100*$0.07=$7) in your balance. Assume you are going short this time. After the ex-div date, your balance will be debited for $7 instead.

Note: Shares or indices CFDs usually gain or lose value with the dividend announcement. This results in a sudden price change and it usually offsets the dividend value credit/debit.

UPCOMING DIVIDENDS

For clients with positions in total return indices, dividends are automatically reflected in the price of the
index. (E.g. DAX30 CFDs are not debited/credited as dividends.)

For clients with insufficient margin while holding short positions on an instrument, we will apply a
temporary margin waiver. Later the dividend value will be applied, and margin waiver will be removed.