Personal Finance & Money Asked by Dans on April 23, 2021
Is the ex-dividend date linked to the time zone of the market it is bought at?
Let’s imagine an American firms stock traded at NASDAQ and a German market, the ex-Dividend day being the 1st February. This announcement is made on their American website, without specifying a time zone. I want to get the dividend.
1) The German market opens at 8am on February 1st local time, which would be 2am on February 1st New York time. I sell my shares at 8am.
So the trade would have been made on ex-dividend day, with NASDAQ being closed. Will I get the dividend?
2) Let’s imagine a bigger time difference, where the market I sell the stock is 8am in the morning of February 1st local time, but New York Time is sill 11pm on January 31. Will I get the dividend?
Or phrased differently, is the Ex-dividend linked to a date, independent of time zones, or is it linked to a local time zone?
Ex-Date is a function of the exchange, as well as the dividend. Consider Deutsche Bank AG, DB on the NYSE, DKR on Xetra.
For a given dividend, each exchange sets the ex-date for trades on that exchange. (See http://www.sec.gov/answers/dividen.htm for a description of how it works in the US; other exchanges/countries are similar.) This ex-date is normally based on the dividends record date, which is when you must be on the company's books as a shareholder to receive the dividend, and based on when trades for an exchange are settled. The ex-date is the first date for which trades on that date will not settle until after the record date.
This means that the ex-date can be different for different exchanges. If you sell your shares on an exchange before the ex-date for that exchange, you will not get the dividend. If you sell your shares on or after the ex-date for the exchange, you do get the dividend. So it depends on the time zone of the exchange.
Most stock exchanges trade T+3, but this can still come into play if there are bank holidays in different countries at different times.
Answered by DanTilkin on April 23, 2021
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