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Corporate actions – equities

FAQ Corporate Actions - Equities

On which date will be defined, which stockholders are be entitled to receive the dividends and/or other entitlements?

To be entitled to receive the dividend, the stockholders must have bought the equities before the ex-date and have held them for at least a full business day. On the record date, which is usually one business day after the ex-date, the companies will determine which buyers receive the dividends.

On which date will the dividends be paid?

The dividends are usually paid on the pay date, deducted of all the default withholding taxes. However, as Cornèrtrader depends on its agent, who informs and confirms the amounts, the payment can be delayed.
For CFDs, the dividends are booked as cash adjustments, deducted of the default withholding taxes, as soon as the agent confirms the amounts. For short CFDs positions, the cash payment will be debited, instead.

What is the difference between cash and stock dividends?

While the cash dividends are paid in the form of cash amount, the stock dividends will be delivered as additional stocks on ex-date for value pay date.
In case of CFDs, the stocks will be allocated on the ex-date for value pay date. But on the short position, the client is debited.

How is the allocation of the rights decided?

The amount of rights are allocated according to the allocation ratio. This determines the amount of rights allocated for a certain amount of shares held.

What is the difference between the subscription and allocation ratio?

While the allocation ratio determines the amount of right allocated per amount of shares, the subscription ratio defines the amount of new shares received for a certain amount of rights.

What is the issue/subscription price?

It is the price at which new shares can be bought.

When does an oversubscription occur?

Companies can enable shareholders to subscribe to buy extra shares, which are not taken by other shareholders. The extra shares will be allocated to the buyers who chose the oversubscription privilege on a pro-rata basis.

What does it happen to the orders on CFDs?

The day before some corporate actions will take place (ex-date) open orders on CFDs on the underlying securities will be deleted. These are generally liquidation, merges, stock splits, reverse stock splits and spin off. For distributions and right issues (such as capital gain distribution, cash dividends, dividend options/reinvest, right issues, share premiums, stock dividends), all open orders on the underlying instrument will be deleted, if the variation in the market price is calculated as being above 20% compared to the current price as an effect of the corporate action event.

How are dividends on index trackers calculated (CFDs only)?

The amount of dividends are calculated as a weighted proportion of the dividend within the Index:

Index Dividend = Share Dividend * Shares in Index / Index Divisor*.

* Divisor: it is an amount used to stabilise the index value so that its value remains constant before and after the event.

The Cornèrtrader account will be credited with the dividends for long positions and debited for short positions.

How can dividends affect a stock-listed option?

When a corporate action affects the underlying equity of a listed option, the contract is adjusted in a way that the value of the options remains the same before and after the event. The exchange will decide case by case how to readjust the contracts. Cornèrtrader follows the adjustments of the exchanges. However, it reserves the right to close out client positions prior to an option adjustment, especially in the event of a non-supported corporate action.

Why is my entitlement not tradable yet?

It can be the case of a mandatory corporate action, whose entitlement has not been yet confirmed on the pay date. In this case, Cornèrtrader sets the security as a dummy and block the possibility to close the position. The entitlements will be booked on the client’s accounts as soon as the counterparty sends the confirmation and makes it available for trading, in case of tradable instalments.

What happens when my stock is delisted?

The delisting happens when an equity does no longer fulfil the requirements of an exchange. It is a mandatory event and usually announced as such in the relevant module on the platform. However, Cornèrtrader depends on the information provided by the agent; therefore, it cannot be considered liable if a delisting is not announced before the event occurs. The security will be reflected as a dummy instrument and if possible, realigned (moved) to another exchange where the equity is tradable. The realignment is subject to a fee (please refer to the commission page for more details).

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