CFD Rights Issue


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Written by Justin Grossbard

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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.

About the author:

Justin Grossbard

Justin Grossbard is the co-founder of CompareForexBrokers and since 2014 with the role of Strategic Head Of Research. He is a member of the AICD and holds a Master's and Bachelor's Degree in Commerce. He previously worked with the banking sector, including ANZ and is a contributor to Finance Magnates, Kiplinger and Forbes. He has also published a book on alternative investments which is available on Amazon.

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