Rural Electrification Corporation Ltd. (RECL) has declared an interim dividend of Rs. 11 per equity share and March 11th is the ex-date. Will this effect the F&O contracts?

F&O
1

Rural Electrification Corporation Ltd. (RECL) has declared an interim dividend of Rs. 11 per equity share and 11 March, 2019 is the ex-date. What’s the impact on F&O contracts?

2

The F&O contracts will be adjusted for the dividend. SEBI guidelines state that

The adjustment in strike price shall be carried out in the following cases of declaration of dividends: Dividends declared at and above 5% of the market value of the underlying stock.

In this case, the dividend is over 5%.

Adjustments for Futures Contracts:

Base price of the Futures contracts on March 11, 2019 will be reference rate less aggregate amount
of dividend i.e. Rs. 11/-. The reference rate to be reckoned for this purpose shall be the daily mark to
market settlement price of the relevant futures contract.

Adjustments for Options Contracts:

The full value of dividend i.e. Rs. 11/- would be deducted from all the cum-dividend strike prices on
the ex-dividend date. The details of the old and corresponding new options contracts that shall be
available for trading from March 11, 2019, would be notified on March 08, 2019.

You can refer to this circular from NSE.

3

@Sam_indori yes since it is extraordinary dividend being more than 5% of market price on the date of declaration /approval.

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