What are the upcoming dividends for FXCM's Index CFDs?
Dividends may impact the amount of “Rollover” you pay on your Index CFD position. Index CFD's are made up of a group of stocks that may pay dividends throughout the year. When a dividend is paid on a stock, the value of the stock will drop and therefore so does the value of the index.
Short positions will be positively impacted by the drop in Index Price, while long positions are negatively impacted.
Dividend adjustments are applied on Index CFD products to negate the impact of the drop in Index Price.
How do Dividends Impact my Trade?
If you are long an Index CFD, you are credited a dividend adjustment. If you are short, you will be debited a dividend adjustment.
Let’s provide an example.
You have a short position on SPX500 and hold that position past 5pm EST on the eve of the ex-dividend date of a stock relating to that particular index.
The index price will be adjusted in your favor (based on the size of the dividends paid out and the weighting of the particular stock/s within the Index) and a dividend adjustment will be debited from the account.
Keep in mind that there are other factors that affect the index price and the index may drop more or less than the exact amount of the dividend adjustment.
Please note that dividends are included in the Rollover amount. To learn more about how rollover is calculated, please click here.
How can I avoid paying dividends on Index CFDs?
To avoid paying dividends, you can close your position before 5PM EST and the charge would not apply.
How can I see when future dividends may impact my positions?
For each index below, the dividend will be displayed as ‘High’, ‘Medium’, or ‘Low’. For High dividend days, the rollover on short positions will be larger than usual.
Why display ranges and not the exact amounts?
FXCM purchases index dividend information in advance to determine the rollover amount displayed in the Trading Station Platform. This is proprietary information from a third party and cannot be released prior to the index issuing a dividend. However, to remain transparent, ‘High’, ‘Medium’, and ‘Low’ indications are used instead.
Where do these ranges come from?
The ranges are based on the past 12 months of dividend data.
Why are long positions credited less than short positions are debited?
The differential is a result of an FXCM Markup.