FTSE dividend payment..

[mrfigure]

Placed a trade on Tuesday with IG £5 short on the ftse.

Noticed at around 4.30 that £126 had been withdrawn from my equity. Phoned IG and was informed it was the dividend adjustment which is made every Tuesday.

The adjustment stripped 25 points out of the ftse.

Anyone else experienced this.

Whilst I accept this is a dividend payment, should it be withdrawn from your account, given the trade you place is a spread bet, shouldnt the trade be allowed to run whether the divi goes for or against you ?

 

[jungerns]

Placed a trade on Tuesday with IG £5 short on the ftse.

Noticed at around 4.30 that £126 had been withdrawn from my equity. Phoned IG and was informed it was the dividend adjustment which is made every Tuesday.

The adjustment stripped 25 points out of the ftse.

Anyone else experienced this.

Whilst I accept this is a dividend payment, should it be withdrawn from your account, given the trade you place is a spread bet, shouldnt the trade be allowed to run whether the divi goes for or against you ?

Sorry to hear this but I had £24.67 deducted for a £1 short on the FTSE via Tradefair at same time......
I was going to query it but as they have been very accurate to date I didn't as numerous times I have had substantial dividend credits on the CAC when going long.......!!

Looks very much in line with my deduction ??

 

[peakoil]

@mrfigure: Yep, know that feeling and it wasn't just you... Btw, it appears that IG will allow folk to call them in advance from Friday afternoons onwards, for an approximate estimate of the following tues divi adjustment. But AFAIK said estimate is not currently posted in advance anywhere on their site. HTH

 

[barjon]

Why does it matter? The net effect is neutral - ftse price marked down 25 giving you 25 x stake "profit" and 25 deducted from your account to compensate giving you 25 x stake "loss" = net 0

 

[mrfigure]

It matters because the £126 is withdrawn from the account. A realised loss. If the trade was left alone, your position has the opportunity to recover.

 

[barjon]

It matters because the £126 is withdrawn from the account. A realised loss. If the trade was left alone, your position has the opportunity to recover.

.....but your position improved by £126 at the same time.It's up to you what you do from there

 

[dealer911]

It matters because the £126 is withdrawn from the account. A realised loss. If the trade was left alone, your position has the opportunity to recover.

If you dont understand divident adjustments are you sure you should be trading ?
The cash adjustment has no effect on the P&L of your account - your position is showing an additional 126 profit because dividends have come out of the price and your cash balance is reduced by 126 to reflect this artificial profit.
126-126 = ZERO

how would you have liked to see this transaction reflected ?

If the spread bet company made no adjustments then all you would have to do is short the market the day before the dividend comes out and buy it back the next day - free money... theres no free money in this game.

 

[troyresearch]

If you dont understand divident adjustments are you sure you should be trading ?

To be fair to the OP, how index divvies are handled for spread betting accounts tends to be something buried away in the weasel words section, rather than being signalled more prominently.

While others have observed this amounts to a zero sum adjustment, it does have an impact on cash balances and therefore needs to be understood by those who may either have smaller sums on deposit or (arguably unwisely) be cutting things fine with available margin.

Spread betting firms could do a better job of explaining how divvies work in their bet example FAQs.