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I currently hold a stock trading on the ASX, and I noticed this morning that my sell order was automatically cancelled. Looking at the queues, I noticed that there were almost no orders in either buy or sell. Looking at the news artifacts for the company, I noticed that today is the ex-dividend date.

Why would buy and sell orders automatically be cancelled on ex-dividend date? Is it a courtesy extended by CHESS, in that an equity's price usually drops by an amount commensurate with the dividend?

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All orders in the market are purged when the market closes on the day prior to a stock turning ex-entitlement (eg ex-dividend, ex rights, ex capital return etc.).

This is done because as the stock going ex-dividend will open with a lower price corresponding to the dividend amount, your order may be executed pre-maturely if they are not purged/cancelled.

If you still wish to go ahead with your order you can enter it into the market again as it was or adjust it accordingly.

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In the US, one of two things happens.

(A)Buy Limit and Sell Stop GTC orders placed below the market are reduced by the amount of the distribution. This is because when a stock goes ex dividend, its price is reduced by the amount of the dividend. This is to ensure that orders placed below the market are executed from market activity rather than price adjustments. The same holds true for stock splits.

Plan (B) is that the broker simply cancels stop/limit orders for the ex-dividend date and later.

I would assume that it's the same on the ASX.

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