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Frequently Asked Questions
A dividend is a payment made by a company to its shareholders from its profits. When a dividend is paid, the company’s share price typically drops by the dividend amount on a specific day known as the ex-dividend date.
A dividend adjustment is a transaction applied to your trading account to neutralize the financial impact of this price drop. When you hold a CFD on an equity index or stock, these adjustments ensure that your position’s value is not unfairly impacted by the gains or losses resulting from the dividend payment itself.
The effect on your account depends on whether you have a long (buy) or short (sell) position:
- For Long (Buy) Positions: Your balance will be credited with the dividend adjustment. This credit compensates you for the price drop in the underlying asset.
- For Short (Sell) Positions: Your balance will be debited with the dividend adjustment. This debit removes the unearned profit you would otherwise gain from the price drop.
The calculation is straightforward and depends on your position size, the instrument’s contract size, and the announced dividend rate.
- Buy Positions (Long) – Credited:
Dividend Adjustment = Lots × Contract Size × Dividend Rate - Sell Positions (Short) – Debited:
Dividend Adjustment = Lots × Contract Size × Dividend Rate
Example 1: Credited Buy Position
You hold a long position of 2 lots on the US30.
- Calculation: 2 lots × 1 (contract size) × $5 (dividend rate) = $10
- Result: Your account is credited with $10 USD.
Example 2: Debited Sell Position
You hold a short position of 1.5 lots on the JP225.
- Calculation: 1.5 lots × 100 (contract size) × ¥15 (dividend rate) = ¥2,250
- Result: Your account is debited with ¥2,250 JPY.
Note: The adjustment is calculated in the quoted currency of the instrument and will be converted to your account’s base currency.
Dividend adjustments are applied to open positions on our Equity Indices and Stock Derivatives.
Adjustments are processed automatically on the ex-dividend date, before the market opens for that instrument. These adjustments can occur multiple times throughout the week depending on market events. For an updated schedule, please refer to the dividend adjustment table on our website.
