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Stock Basket Dividends and Withholdings

Dividends may impact the amount of overnight costs you pay or earn on your Stock Basket position. Stock Baskets 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 Basket.

Short positions will be positively impacted by the drop in Basket Price, while long positions are negatively impacted.

Dividend adjustments are applied on Stock Basket products to negate the impact of the drop in Index Price.

How do Dividends Impact my Trade?

If you are long a Stock Basket, 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 FAANG and hold that position past 5pm EST on the eve of the ex-dividend date of a stock relating to that particular index (in this case one of Facebook, Apple, Amazon, Netflix or Google).

The basket price will drop 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 basket price and the basket may drop more or less than the exact amount of the dividend adjustment.   

How can I avoid paying dividends on Stock Baskets?

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 is both a result of an FXCM Markup and Withholdings.

As per Section 871 of the US tax code. A 30% tax applies on dividend adjustments to traders of equity derivatives of US stocks.

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.

Note: That when your account is debited, FXCM also pass on 30% of that debit to the IRS.

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 FAANG displayed "Div B" 0.23 that would be a credit of 0.23 USD per contract, irrepsecitve of your account denomination.

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 using the login 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.

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