Tokenised indices

Dividends payments on indices markets

Dividends payments may be accrued to the clients who have tokenised indices

What is a dividend payment?

The distribution of a section of a company’s earnings to its shareholders is known as its dividends. Dividends are a portion of earnings chosen by the company’s board of directors and can be issued in the form of shares of stock, cash payment or property. When a company makes a profit it can reinvest this money back into the company and/or distribute the profits to its shareholders. If a company decides to pay its shareholders dividends, a fixed amount per share is designated and shareholders will receive this amount at a specific date.

The ex-dividend date determines when trading in the underlying stock no longer includes an entitlement to the upcoming dividend payment and therefore on the ex-dividend date the value of the underlying share will decrease by the approximate dividend value. Anyone that already have an operation opened in the underlying stock prior to and going into the ex-dividend date will be entitled to receive, or required to pay, the dividend depending on whether they are long or short. Anyone opening an operation on the ex-dividend date will not be entitled to, or required to pay, the dividend.

How dividends are applied for indices?

An index typically reflects the weighted average share price of several underlying stocks trading on the same exchange, therefore if one of these stocks declares a dividend payment then the underlying share price will decrease by the dividend value and the index will also decrease by the equivalent weighted average value of the same dividend on the ex-dividend date. Clients that have opened operations on indices markets will receive or pay the equivalent weighted average value of the same dividend on the ex-dividend date.

Can owner of tokenised index receive dividends?

The owner of tokenised index can claim to receive the same economic effect received by the owners of the related index. In other words, if the owner of a “real” index receives dividends from it for owning such an index, a proportional quantity of tokens can be credited to the Account on the cryptoplatform Dzengi.com to those, who owns the related tokenised index.

Please note that the economic effect of owning a tokenised asset can be positive or negative.

If on the ex-dividend date you are the owner of a tokenised index, purchased in the section (mode) “Exchange” or purchased in the section (mode) “Leverage” of the cryptoplatform when carrying out a Long-operation, the economic effect of owning such a tokenised index can be positive, – the amount of tokens, accounted for you on your Account can be increased in proportion to the amount of dividends paid by the relative company.

If on the date of the ex-dividend date you are the owner of a tokenised index, purchased in the section (mode) “Leverage” of the cryptoplatform (trading platform) when carrying-out a Short-operation, the economic effect of owning such a tokenised index may be negative, – the amount of tokens, accounted for you on your Account may be decreased in proportion to the amount of dividends paid by the relative company.