GTC Orders that are placed underneath the market and left with the specialist / DMM for execution will be reduced for the distribution of dividends. Orders that will be reduced are:

  • Buy Limits
  • Sell Stops

These orders are reduced because when a stock goes ex dividend its price is adjusted down. To ensure that customer orders placed below the market are only executed as a result of market activity, the order will be adjusted down by the value of the dividend.

Example:

A customer has placed an order to buy 500 XYZ at 35 GTC. XYZ closed yesterday at 36.10. XYZ goes ex dividend for 20 cents and opens the next day at 35.90. The customer’s order will now be an order to purchase 500 XYZ at 34.80 GTC.

If the customer had entered the order and specified that the order was not to be reduced for the distribution of ordinary dividends, it would have remained an order to purchase 500 shares at 35. The order in this case would have been entered as:

Buy 500 XYZ 35 GTC DNR

Orders placed above the market are not reduced for distributions.



Adjustments For Stock Splits

Related Articles
  1. Trading

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  2. Investing

    Narrow Your Range With Stop-Limit Orders

    With stop-limit orders, buyers protect themselves from prices too high for their tastes.
  3. Investing

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
Frequently Asked Questions
  1. What is the difference between a capital expenditure and a revenue expenditure?

    Capital expenditures represent major investments of capital that a company makes to expand its business and generate additional ...
  2. What is the difference between revenue and income?

    Revenue is simply the total amount of cash generated by the sale of products or services associated with the company's primary ...
  3. How can my stock's price change after hours, and what effect does this have on investors? Can I sell the stock at the after-hours price?

    When the regular market opens for the next day's trading, stocks may not necessarily open at the same price at which it traded ...
  4. What's the difference between a 401(k) and a Roth IRA?

    A 401(k) and a Roth IRA differ primarily on tax treatment, investment options, employer involvement, and limitations on contributions ...
Trading Center