1. What are dividends and the ex-dividend date?
- A dividend is a payment distributed by a listed company to shareholders from profits or retained earnings. When a stock pays a dividend, the related stock CFD and index CFD products may also be subject to corresponding dividend adjustments.
- For index CFDs, the ex-dividend date is set by the index provider based on the ex-dividend dates of the constituent stocks, and it is also the dividend payout date.
2. Timing of dividend adjustments
Dividend adjustments for index CFDs are usually reflected in your MT4/5 trading account between 05:00 and 06:00 (GMT+3) on the ex-dividend date and are marked as Dividend.
3. Impact of dividends on index trading
Long positions (buy): the dividend adjustment will be credited to your MT4/5 account.
Short positions (sell): the dividend adjustment will be debited from your MT4/5 account.
4. Formula for dividend adjustment
Long position (buy) formula: Lots ? Contract Size ? Long Dividend Amount (calculated in the index pricing currency)
Short position (sell) formula: Lots ? Contract Size ? Short Dividend Amount (calculated in the index pricing currency)
5. Example of dividend adjustment calculation
Using SPXUSD as an example, assume the ex-dividend date is October 11, 2024. The long dividend amount is USD 0.050 and the short dividend amount is USD -0.050.
If you hold 1 standard lot of SPXUSD in a long position (buy) at the market close on the day before the ex-dividend date (October 10), the dividend adjustment is calculated as follows:
- Dividend Adjustment = 1 (standard lot) ? 100 (contract size) ? USD 0.050 (long dividend amount) = USD 5
Between 05:00 and 06:00 (GMT+3) on the ex-dividend date, USD 5 will be credited to your MT4/5 account with the remark Dividend.
If you hold a short position (sell), USD 5 will be deducted from your MT4/5 account with the same remark.
6. Notes
Dividend adjustments apply only to index and stock CFD trading. Account balances will be adjusted based on whether you hold a long or short position. Dividend amounts and their impact may vary depending on the specific index and market conditions.
If you have any questions, please contact your account manager or visit our official website for more information.