What happens to my position if the company performs a stock split or consolidation?

A stock split occurs when a listed company splits its outstanding shares into more shares, often to make the shares more affordable for retail investors and therefore attract more investment. The company’s market cap and the overall value of each shareholder’s investment stay the same during a stock split, but the price of each share is reduced as the number of shares increases.

A consolidation or reverse stock split is when a company wants to lower the number of outstanding shares and increase its share price. Some stock exchanges have a minimum share value, so a company may employ a reverse stock split to avoid being delisted from said exchange. This can also take place to make a company appear more valuable to potential investors, as a higher-value share could improve sentiment.

With a stock split/consolidation, the company will determine the split/consolidation ratio – this is the ratio by which the number of shares and current share price will adjust.

Stock split example

Apple announce a stock split at a ratio of 10-1. On the ex-date, you have 100 shares trading at $5 per share.

We close your original position, and open a new one. You now have 1000 shares trading at $0.50 per share – so the total size of your position remains the same.

Stock consolidation example

Apple announce a stock split at a ratio of 1-10. On the ex-date, you have 1000 shares trading at $5 per share.

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.

We close your original position, and open a new one. You now have 100 shares trading at $5 per share – so the total size of your position remains the same.

If you have a position on a company which performs a stock split or consolidation, we’ll close your original position at its opening level and open a new trade on your behalf. The new position will reflect the ratio of the split/consolidation, ensuring that you don’t gain or lose any capital in the process.

How does stock split/consolidation affect my CFD account?

If you have a position on a company which performs a stock split or consolidation, we’ll close your original position at its opening level and open a new trade on your behalf. The new position will reflect the ratio of the split/consolidation, ensuring that you don’t gain or lose any capital in the process.

If you have a stop on your position, then we’ll close the original position at its opening level and open a new position that reflects the terms of the offer. Any stops or limits attached will also be amended accordingly, so that your monetary risk remains the same.

How does a stock split/consolidation affect my share trading account?

If you have a position on a company which performs a stock split or consolidation, we’ll close your original position at its opening level and open a new trade on your behalf. The new position will reflect the ratio of the split/consolidation, ensuring that you don’t gain or lose any capital in the process.

Please kindly note that the adjustment affects your original book cost level and book cost will reflect as zero. As such, you may see a different profit/loss figure on your account after the adjustment. If you would like to correct the book cost on your account, you may adjust your book cost on your platform. To amend the book cost, you may find out more here.

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