Dividends and Withholdings on Exchange-Traded Funds (ETFs)
Dividends may impact the amount of overnight costs you pay or earn on your Exchange-Traded Funds (ETFs) position(s). When a dividend is paid on an ETF, the value of the ETF will drop and therefore so does the value of the position. Short positions will be positively impacted by the drop in price, while long positions are negatively impacted. Dividend adjustments are applied on ETF products to negate the impact of the drop in price.
How do Dividends Impact my Trade?
Dividends are applied on the Eve of the Ex-Dividend date.
For example, if the Ex-Dividend Date was February 3rd, all positions held at the end of February 2nd would be subject to a dividend adjustment. If you are long, 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 the SPDR S&P 500 Etf Trust (SPY.us) and hold that position past 5pm EST on the eve of the ex-dividend date of the ETF. The ETF price will drop in your favor (based on the size of the dividends paid out and the weighting of the particular ETF) and a dividend adjustment will be debited from the account. Keep in mind that there are other factors that affect the price and the ETF may drop more or less than the exact amount of the dividend adjustment.
How can I avoid paying dividends on Stocks?
To avoid paying dividends, you can close your position before 5PM EST and the charge would not apply.
Why are long positions credited less than short positions are debited?
The differential may both a result of an FXCM Markup and Withholdings. For example for US ETFs, as per Section 871 of the US tax code. A tax applies on dividend adjustments to traders of equity derivatives of US ETFs. In accordance with FXCM's obligation under this US tax regulation, 30% of all Dividend adjustments are withheld and passed on by FXCM to the IRS.*
*This tax treatment is applied by default to all positions and may be subject to change in the future. Rebates may be available depending on your individual tax and residency circumstances, or may differ based on the respective jurisdiction. Please contact FXCM support if you believe you may be entitled to a rebate for additional information you will need to provide. This information is for references purposes only, and reliance on the information contained herein is not an alternative to legal advice from an attorney or other professional legal/accounting services provider. This information is not intended as a financial or an investment advice and must not be construed as such. Seek advice from a separate financial advisor. FXCM assumes no liability for errors, inaccuracies or omissions; does not warrant the accuracy, completeness of the information or other items contained within these materials.
Where can I view upcoming dividends?
The daily dividend amount can be viewed from the simple dealing rates window in the Trading Station platform in the columns marked "Div S" (For sell/short positions) or "Div B" (For buy/long positions).
Please Note: Upcoming dividends are displayed in the counter currency of the instrument (For e.g if the Invesco QQQ Trst (QQQ.us) displayed "Div B" 0.23 that would be a credit of 0.23 USD per min trade size or if the Ishares Physical Gold (IGLN.uk) displayed "Div S" of -1.32 that would be a debit of 1.32 GBP per min trade size)
Where can I view past dividends?
Dividends paid or earned on a specific position can be found in the account statement. Account statements can be accessed via the "Report" button on the Trading Station platform (Desktop, Web, or Mobile) or by entering MyFXCM.com using the username for the account you want to run the report on. From the menu, go to My Info->Reports. Fill out each field as desired, and then click on the blue Get Report button.