IB CFDs Corporate Actions

Index CFDs

Dividends

IB will make a cash adjustment based on the ordinary dividends paid by the constituents of each index. Dividends are accrued on the ex-date for the underlying share, and settled on the paydate.

Corporate Actions

IB does not adjust index CFDs for corporate actions. Corporate actions affecting index constituents are reflected directly in the index level.

Share CFDs

Dividends & Corporate Actions Summary

In the event of a corporate action on the underlying security of a CFD, IB will generally reflect the economic effect of the corporate action for CFD holders as if they had been holding the underlying security. This will be done through a cash adjustment, a position adjustment, delivery of a new security or CFD, or a combination of these. In cases where the corporate action is complex and IB is unable to determine an accurate adjustment, the CFD position may be closed out prior to the ex-date.

Examples of Corporate Action Handling

Specific Handling

Fractional Share Adjustments

In the event the corporate action results in a fractional position, the fractional component may be represented as a cash adjustment independent of the handling for the non-fractional position. The adjustment value will equal the fractional position times the adjusted closing price on the day prior to the ex-date.

Dividend Cash Flow

A dividend adjustment is recorded as a dividend payable/receivable when a share passes its ex-dividend date, and is paid/charged on the matching payable date as the underlying.

If a choice between cash and stock is offered (choice dividend), IB will reflect the dividend as a cash adjusting payment-in–lieu-of-dividend (“PIL”) for long CFD position holders. Short position holders may be charged a PIL, or new shares with a fractional share handling in cash. Dividends are generally applied net of withholding tax to long positions, and on a gross basis to short positions. In the case of UK shares, the dividend adjustment is equal to the amount of the dividend as paid, both long and short (as there is no UK withholding tax on dividends).

Actions typically leading to Position Changes (splits, reverse splits, buybacks, spin-offs, mergers)

• When a corporate action results in the creation of new shares in the existing underlying, IB will create additional CFDs (position adjustment) in a manner consistent with a position holding in the underlying stock.
• If the corporate action results in the creation of a new listed entity, and IB determines in its sole discretion that it will include the new shares in its general CFD offering, IB will also in this case effect the corporate action by creating additional CFDs on the new security.
• In the event of a buyback or other partial tender, the action will be effected to reflect the performance of an investor in the underlying stock, including a position adjustment for the residual position, a cash adjustment for accepted positions, where the acceptance rate is based on the announced acceptance rate by the issuing Company for all shareholders.

Position Terminations

In cases where IB is unable, in its sole judgment, to determine a fair and transparent handling of a corporate action, IB will terminate the CFD prior to the ex date for the event. IB will announce terminations at the earliest opportunity. Position closeouts will be valued at the closing price on the termination date.

General Termination Conditions of CFD Contract

IB may terminate the CFD contract for a variety of reasons if, in its sole judgment, it determines that the CFD is no longer an adequate representation of the economics of the underlying instrument. This may occur in the case of certain corporate actions as noted above. IB may also terminate the CFD in other circumstances, for example (without limitation) in case of illiquidity in the underlying asset, absence of sufficient and appropriate borrow ability in the underlying asset, insolvency, dissolution or delisting of the underlying security.