Dividend debits or credits are very similar to interest charges in that they are used to ensure that CFDs mirror the value of their underlying equity index. The CFD equity index must be bought or sold before the dividends are applied and must be held through the process to be entitled to the dividend. [Dividends are applied when the CFD markets are closed between 21:00 UTC – 22:00 UTC]
If a trader holds a LONG CFD on an index prior to the application of the dividend payment then their account is entitled to receive a dividend payment. For example, if dividends are applied to the CFD index on Thursday, then the trader would’ve had to have bought it at least on Wednesday and must be holding it to earn the dividend credit. Conversely, a trader holding a SHORT CFD on an index will have the dividend amount debited from their account.
On the date when dividends are applied, one can expect the value of the index to drop by the dividend amount. What this means in practice is that your long CFD position can be expected to suffer a loss even as the dividend amount is being credited to your account. A short CFD position can be expected to earn a profit even as the dividend amount is being debited from your account. The NET EFFECT on your account EQUITY is ZERO.
Dividend Adjustment (example)
- Client is holding a LONG 10 US SPX500 @ $ 2150.1
- Dividends are applied to all accounts that are eligible.
- Dividend payment applied = $ 1.30
- US SPX500 adjusted lower by $ 1.30
- NET EFFECT on account EQUITY is ZERO !
TRADE WITH A LEADING CFD PROVIDER
WORLDWIDEMARKETS IS PROUD TO OFFER RETAIL AND INSTITUTIONAL CLIENTS A WIDE VARIETY OF CFDS. WE ARE TRUSTED AS ONE OF THE WORLD’S LEADING CFD PROVIDERS WITH OVER 20+ YEARS OF CFD TRADING EXPERIENCE.
Trade global equity indices and commodities such as gold, silver, oil, and other popular interest rate securities. Our clients benefit from our premium-level trading platforms, knowledgeable customer services, professional charting packages and more. WorldWideMarkets has established regulatory hubs in both Europe and the Americas. WWM is regulated by the FCA and segregate client funds to ensure the highest level of service.