A corporate action is an event initiated by a public company that affects the shares/equities issued by the company. For example:
Dividend - A portion of corporate profits that are allocated to shareholders. When a dividend is paid, the value of the share drops.
Spinoff - An independent company is created through the distribution of new shares of the parent company. The parent company’s shares will lose value following a spinoff, and shareholders receive equivalent shares of the new company as compensation.
Rights Issue - Existing shareholders are offered a right to purchase additional shares of the company at a discount. This usually lowers the price of the company’s share.
Stock Split - Increasing the number of outstanding shares by dividing each share, while the market cap remains the same. Share value decreases, as number of shares increases.
As you do not own the physical share/equity when trading CFDs, you neither acquire voting rights, nor any rights under a rights issue or similar event such as stock split, etc.
Therefore, in order to ensure that there is no material impact to your open position(s), following an increase/decrease in the company’s share price, Plus500 will automatically add to/subtract from your balance the amount you would have incurred as an additional loss/profit (depending on your position’s direction). This is referred to as an ‘Adjustment’.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.