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. Investing

    Making The Trade: Understand Order Types

    Buying and selling stock can be a lot like buying or selling a car. Traders should use and understand tools such as market orders, limit orders, day orders, and good-'til-canceled orders to ensure ...
  2. Investing

    Understanding Buy Stop Orders

    A buy stop order is an order to buy a stock at a specific price above its current market price.
  3. Trading

    The Basics of the Bid-Ask Spread

    Successful traders must be aware of the difference between the bid price and the asking price of a security.
  4. Trading

    Explaining Buy Limit Orders

    A buy limit order allows traders and investors to specify the price that they are willing to pay for a security, such as a stock.
Frequently Asked Questions
  1. When short selling a stock, how long does a short seller have before covering?

    The lender of the shares in a short sale has the ability to request the shares be returned at any time, with minimal notice, ...
  2. What major is required to take the Series 7 examination?

    Find out what educational requirements are needed for the Series 7 exam. Learn about the new Securities Industry Essentials ...
  3. What do the different colored candlesticks mean?

    A typical candlestick chart is composed of a series of bars, known as candles, which vary in height and color.
  4. How can I determine a stock's next resistance level or target price?

    Determining where the price of an asset will stop once it has hit a new high is one of the most difficult tasks for any trader.
Trading Center