How do I trade CFD Shares with ATFX?
When trading a single CFD share there will be corporate actions enforced by the related company. An example of this is a cash dividend. If this has been issued then ATFX will adjust the client’s account accordingly. ATFX will take two actions:
Clients who hold BUY position(s) in a single share CFD on the ex-dividend date, will receive a positive cash amount which is equivalent to the dividend payout. (Deposits will be made into the client’s trading account according to their lot size and proportion of the dividend paying underlying securities).
Clients who hold SELL position(s) in a single share CFD on the ex-dividend date, will receive a cash amount which is equivalent to the dividend payout. (Withdrawal will be made from the client’s trading account according to their lot size and proportion of the dividend paying underlying securities.)
Number of shares * Dividend per share = Adjustment amount
(If client account is denominated in USD, the adjustment amount will be converted to USD according to the spot exchange rate)
For example, if Apple Inc. (AAPL) announces a $0.01 USD cash dividend to its shareholders. On the ex-dividend date, Apple Inc.’s share price would reflect the corporate action and would drop $0.01 in price. ATFX will make cash adjustments to clients who are holding open positions of the Apple Inc. CFD.
If an individual client of ATFX is holding 10,000 shares of BUY positions, the cash adjustment will be calculated using the following equation:
10,000 share CFDs x 0.01USD = 100USD cash dividend
(Note: If a client is holding 10,000 shares of SELL positions, ATFX will deduct 100USD from the client’s account.)
Share Split or Reserve Share Split
If a company announces a share split or reserve share split, the company’s share price will be subject to significant change.
Reserve Share Split: CFD price will increase
Share Split: CFD price will decrease
Open positions of the Apple Inc CFD. Should this not just say ‘clients who are holding open positions of the relevant CFD?’
However, a single share CFD will also be affected by corporate action, which may occur when the listed company initiates any business changes Like a share split, reserve share split, or a dividend payout, etc., and as a result may affect the company’s financial position, its share price performance, and the interests of shareholders.
A listed company will announce its earnings reports semi-annually (or quarterly). Dividends are subject to approval by a company’s board of directors, and It’s a distribution of a company’s earnings to a specified class of its shareholders. Generally, dividends will be issued in the form of cash dividends or share dividends.
An ex-dividend is a share trading term that specifies when a declared dividend is owned by the buyer, as opposed to the seller. If an individual buys a share before the ex-dividend day, he or she is then entitled to receive a dividend. If an individual buys a share on or after the ex-dividend date, the buyer no longer had the right to receive the dividend.