What is a Corporate Action on an Exchange-Traded Fund (ETF) and how does FXCM treat them?
A corporate action on an Exchange-Traded Fund (ETF) is something which will bring about a change to an ETF, such as but not limited to a split, reverse split, or a delisting.
If there is a corporate action on an ETF and that ETF is the underlying instrument of a FXCM CFD contract, FXCM shall determine in accordance with market practice and internal policies the appropriate adjustment, if any, to be made to the current contract value or contract quantity of any open positions in order to preserve the economic equivalent of your position or to reflect the effect of the underlying event on your CFD position.
This may result in the liquidation of positions, the closure and reopening of positions at adjusted rates, dividend adjustments, the transfer of positions to a new symbol or other actions outlined below.
If the economic equivalent of the corporate action is one that FXCM is unable to replicate on a CFD contract, then we may close the relevant CFD contract prior the effective date of the corporate action.
Depending on the type of corporate action, all open positions may potentially be liquidated and/or pending entry orders, stops and limits associated with the instrument may be cancelled. In this case clients would need to re-establish another position if desired and/or insert new stops and limits.
FXCM aims to open and close markets as close to the posted trading hours as possible, however in the event of certain corporate actions, FXCM may place trade restrictions, delay market open or bring forward market close.