What happens to my position if the company performs a spinoff?

A spin-off is the creation of an independent company through the sale or distribution of new shares of an existing business or division of a parent company. This is usually carried out when spin-off companies are expected to be worth more as independent entities rather than as parts of a larger entity.

Example:

Company A had performed a spin off and will be issuing 1 share of company B for every 5 company A shares held in the account. If you are holding on to 100 company A shares, this means that you will be receiving 20 shares of company B as per the spinoff terms.

Please note that you do not have to take any action for mandatory corporate event and we will assist to book these positions for you accordingly.

How does a spinoff affect my CFD account?

If you have an open position on a stock that announces a spinoff, then we’ll create a position on the new company at a level of zero in accordance with the terms of the spinoff on the ex-date.

If you have a guaranteed stop on your position, then we’ll amend it in accordance with the terms of the offer. A separate position will then be posted on your account in the name of the spun-off company, with a stop attached to ensure your total monetary risk remains the same.

Please be aware that spin off shares may/may not be tradeable on the market and once the shares is tradeable, you may choose to trade the new company.

What if I have a short position?

If you have a short position, the spin off shares would be opened as a new short position at a level of zero increasing the number of shares you hold short in accordance with the spin off terms

How does a spinoff affect my share trading account?

We’ll create a position on the new company at a level of zero in accordance with the terms of the spinoff. Please note that there can be a delay in the allocation of the spinoff shares and the shares may not be credited on the pay date. It may take several days after the pay date for us to receive the shares. Once we have received the shares, these shares will be allocated to the accounts accordingly.

Please be aware that spin off shares may/may not be tradeable on the market and once the shares is tradeable, you may choose to trade the new company.

Please note: This information is intended as a generic example, and subject to change at any point. It may not apply in every scenario.