What are the Dividends Adjustments for Cash Index CFDs

If any of the constituent stocks in the underlying product of a cash index CFD pays a dividend, the CFD will also pay a corresponding dividend.

In most cases, if a stock pays a dividend, its value decreases, causing the index value to drop as well. This drop benefits short positions, while long positions are affected negatively. 

To counter this effect, cash Index CFD products are adjusted for dividends, if you hold a long position in a cash Index CFD, you will receive a dividend adjustment credit. Conversely, if you have a short position, you will be debited a dividend adjustment.

Dividend adjustments are reflected on your account balance by adding to your ordinary overnight costs on the eve of the Ex-dividend date, below is an example:

NAS100 Cash CFD is scheduled for a dividend entitlement of 20 USD per lot on Ex-dividend day 2022-03-10. You have a short position of 2 lots on NAS100 and hold the position past the end of trading day of 2022-03-09.

On 2022-03-09, the ordinary overnight cost for NAS100 is -25/8 for long and short positions respectively. With the dividend adjustments, the new overnight costs would be:

For Long position:    Ordinary overnight cost + Dividend adjustments = -25+20 = -5 USD

For Short position:    Ordinary overnight cost + Dividend adjustments = 8-20 = -12 USD

Overnight costs with dividend adjustments:    Volume * dividend adjusted Overnight costs per lot = 2 * -12 = -24 USD

By holding 2 lots short position, an amount of 24 USD will be debited from your account.

If the Ex-dividend date is on a Monday, the dividend adjustment would be done on the previous Friday. Since 3-day swap is applied on Friday for Cash CFDs, the dividend adjustments will be divided by 3 before adding up to the overnight costs. Below is an example:

NAS100 Cash CFD is scheduled for a dividend entitlement of 30 USD per lot on Ex-dividend day 2022-03-14(Monday). You have a long position of 1 lot on NAS100 and hold the position past the end of trading day of 2022-03-11(Friday).

On 2022-03-11, the ordinary overnight cost for NAS100 is -25/8 for long and short positions respectively. With the dividend adjustments, the new overnight costs would be:

For Long position:    Ordinary overnight cost + Dividend adjustments = -25+30/3 = -15 USD

For Short position:    Ordinary overnight cost + Dividend adjustments = 8-30/3 = -2 USD

Overnight costs with dividend adjustments including 3-day swap:    Volume * Dividend adjusted overnight costs per lot * number of days = (1 * -15) * 3 = -45 USD

By holding 1 lot long position, an amount of 45 USD will be debited from your account.

The use of Dividend Schedule

You can refer to the schedule posted in this website for the dividend projection in this week. Please note that the timetable is intended for reference only and the information may change according to the adjustment made by our Liquidity Providers and Exchanges.

Specific information on overnight costs can be found by right-clicking on the product in the client terminal and selecting "Specification" or on the Product Specification page in this website.