A corporate Action can be defined as an event that brings about a material change to a stock,
or an event that is initiated by a firm that has an impact on its shareholders. Dividends,
stock splits, acquisitions, mergers and stock buy backs are all examples of Corporate Actions.
If you hold CFDs and a company announces a dividend, your account will be credited/ debited on
the day the stock goes "Ex-Dividend".
Vodafone announces a 15p dividend
You currently hold 3,000 Vodafone CFD shares
15p x 3,000 = 450.00
450.00 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)
On your daily statement the dividend will appear under Ledger Activity as:
Corp Action: Cash Dispersion Corp Action:
Cash Disp XXX paying YYYY
(Where XXX is the instrument and YYY is the amount of the Corporate Action).
Stock Splits are used when the value of a company's stock is getting too high. The company will
basically offer more stocks in the company but at a lower price.
You hold 300 contracts in Y at a price of 1,607 per share
Company Y announce on X 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 contracts at the reduced price of 321.4.
Note the overall contract value remains the same (300 contracts x 1,607 = 4,821, 1500
contracts x 321.4 = 4,821)
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).
With a Rights Issue a company will offer its shareholders a chance to buy newly issued shares,
usually at a discounted price, before it is offered to the public.
CMC Markets will endeavour to send you an email outlining the details of the rights issue.
Spread Betting, CFDs and Forex are leveraged products and carry a high degree of risk to your capital and it is possible to lose more than your initial investment. Only speculate with money you can afford to lose. These products may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary. CMC Markets UK Plc and CMC Spreadbet Plc are authorised and regulated by the UK Financial Conduct Authority. The Irish Financial Services Regulatory Authority has a supervisory role in respect of CMC Markets Ireland conduct of business and transaction reporting obligations.*Tax laws can change.