Single Share CFDs Corporate Actions
What is a Stock Split?
A stock split is a corporate action that increases the number of a company’s available shares. This is done by dividing each share into multiple ones and reducing the share price accordingly. A stock split does not impact the company's market capitalization.
Company X is trading at $100. The trader owns 5 shares. The value of the client’s portfolio is $500.
The company have a 2 for 1 stock split.
After the split, the trader will now own 10 shares, but the new price per share will be $50. The value of the client’s portfolio remains $500.
What Companies offered by FXCM have splits upcoming?
Please note the below information is indicative and subject to changes/additions with no notice.
NVIDIA (NVDA.us) has an upcoming 4:1 stock split effective Tuesday July 20th, 2021.
All clients who hold open positions at the end of trading on Monday 19th July 2021, will be impacted by the split.
How does a split impact my Orders/Positions?
Clients with open trades will have their positions automatically closed and then reopened at x times the quantity with the new open rate being 1/xth of the closing rate. Where x is the ratio of the split.
Margin requirements will be updated to reflect the new trade sizes.
All pending entry orders and stop/limit orders that are associated with these instruments will be cancelled. Clients will need to re-establish new entry orders if desired or to reinsert stop and limit orders.
The stock split itself does not result in any direct profit/loss or change in account equity. However, any floating P/L on the original ticket will be realised and reflected in your account balance.
What happens to positions on Indices and Stock Baskets?
Baskets and Indices with components that have a stock split, do not have their rate impacted directly by the split.
There is an internal rebalance to the equation that govern the pricing of these products, and the weighting of the relevant stock within the index is multiplied by x to account for the 1/X drop in price and therefore there is no impact on the overall basket price.
What happens to the charts?
At the time of the split, the historical charts will not be updated. This allows clients the ability to self-audit any historical trades.
However within a few weeks following the split, we will divide all historical charting by the ratio of the split, in order to allow indicators to perform relevant analysis on the historical price movements.