How are dividend adjustments calculated for index CFDs?

Clients who have open positions on CFDs don’t receive dividends in the same way that shareholders do. However, CFD trading is subject to dividend adjustments. In this way, the dividend adjustments applied to CFD trading on indices account for the dividends paid out on the underlying assets on which these CFDs are traded. Dividend adjustments are calculated based on dividend announcements made by the company that issues the shares.

The dividend adjustment date corresponds to the underlying share’s ex-dividend date, which is the date before which you must own the share in order to receive the declared dividend. Dividend adjustments are calculated for all open positions, with the adjustment applied to long positions always positive, and the adjustment applied to short positons always negative.

Example: Dividend adjustment on an index CFD

Suppose that a company, whose share makes up part of the index on which the client has an open position, announces an ex-dividend date of 15/03/2019.

Please note, that the dividend adjustment will depend on the volume, i.e. the net volume of the client’s open position in lots, the dividend amount, and the size of one lot.

A client has an open position worth 2.5 lots on the SXP500 index on the ex-dividend date, where according to the contract specifications, one lot amounts to 10 contracts, and the dividend amount on 15/03/2019 was 2.11 USD. In this case, the dividend adjustment will be calculated as follows:

Dividend adjustment (indicated in the contract specifications) × Contract size × Volume (lots)

Calculation:

2.11 USD × 10 contracts × 2.5 lots = 52.75 USD

If the client’s long position is still open at the beginning of the trading session on 15/03/2019, their trading account will be credited with the dividend adjustment amount of 52.75 USD, while if the client has a short position of equal value open at the beginning of the trading session on 15/03/2019, the dividend adjustment amount of 52.75 USD will be debited from the client’s trading account.

You can check the dividend adjustment amounts declared for individual index CFDs in the contract specifications.

Attention!

  • The dividend adjustment amount is not decided by Alpari. It depends on parameters set by our liquidity providers. As such, dividend adjustments quoted on any asset are provisional, and may be amended in accordance with changes made by our liquidity providers.
  • In some cases, Alpari is required by the laws of the issuing company's or holding company's country to withhold taxes on dividend adjustments. In such cases, dividend adjustments will be credited to the client’s trading account only after the tax amount has been deducted. The tax amount is not withheld in cases where the dividend adjustment amount is deducted from the client’s trading account.