When it comes to money and investing it’s easy to lose money, or the potential of extra profits, by not being completely on the ball.
Corporate Actions and CFD Rights Issues
If you buy shares using a CFD, you don’t own the physical shares. Your broker will hold them on your behalf and enter a swap-like transaction (the CFD) with you. This means you’ll own the right to 100% of the profits as well as 100% of the losses.
For more, see – who owns the physical shares in a CFD trade
However, the CFD contract will mean you have the right to any dividends (some brokers only pay 90% of the value, others 100%). More information on Dividends and CFDs.
CFDs and a Rights Issue
The CFD holder will hold the right but not the obligation to buy more of a company’s shares if they enter into a Rights Issue. But of course, like any corporate action, the rights won’t have to be taken up if you don’t want to buy more shares.
Broker Trust – Be Fail Safe
When it comes to money and investing, it’s easy to lose money, or the potential of extra profits, by not being completely on the ball.
So if I was trading a share using CFDs and the company announced a rights issue or another corporate action, I’d be on the phone to my CFD broker double-checking the options open to me.
My policy is simple – There are no stupid questions when it comes to trading our money. Check our our Best CFD Broker UK List with all FCA regulated platforms.