CFDs
Corporate Actions and Rights Issues
|
|
|
Last update : November 2011
|
| If you buy shares using a CFD you don't own the physical shares. Your broker will hold them on your behalf and enter a swap like transaction (the CFD) with you. This means you'll own the right to 100% of the profits as well as 100% of the losses.
However, the CFD contract will mean you have the right to any dividends (some brokers only pay 90% of the value, others 100%). More information on Dividends and CFDs.
|
|
|
| CFDs and a Rights Issue |
| The CFD holder will hold the right but not obligation to buy more of a company's shares if they enter into a Rights Issue. But of course, like any corporate action the rights won't have to be taken up if you don't want to buy more shares.
|
| Make it fail safe - Ask your broker for confirmation |
|
When it comes to money and investing it's easy to lose money, or the potential of extra profits, by not being completely on the ball.
So if I was trading a share using CFDs and the company announced a rights issue, or another corporate action I'd be on the phone to my CFD broker double checking the options open to me.
My policy is simple -
There are no stupid questions when it comes to trading our money. See Secret 6 - Ask - there are no stupid questions - which is one of this site's 10 Secrets to Good Personal Finance.
|
|
|
FREE Report
How to Learn Spread Betting and Prosper
|
|
|
|
|
How to build the all-important trading experience
|
|
Where to get trading help and advice
|
|
|
Which broker to use and why
|
|
Simple 2 month training plan to follow
|
|
|
More details |
|
|
|
|
|
|
Read more in the CFD section:
|
|
|
|
|
|
| Looking for something? Then search this site: |
|
|
|
|
|
|
|
|
|
|
|
