Long-term order is an order type that remains in effect until a specified date unless the transaction has been fulfilled or cancelled. If the trade is not executed, the long-term order will be cancelled after the end of the specified trading day. Long-term orders include "GOOD TILL DAY (GTD)" and "GOOD TILL CANCELLED (GTC)" orders.
Whether a corporate action will affect the execution of a long-term order mainly depends on if the corporate action will result in a change in the customer's shareholding, such as share consolidation and share split. Please refer to the following examples:
|Share Consolidation||Reduce the number of shares outstanding and consolidate existing shares.(Par value of each stock ↑ Shareholders' shareholding ↓ Market value , total shareholders' equity remain unchanged)|
If the customer holds 100
shares of company A and the
current stock price is $5, the
value of the stock held is 100*5=$500. If Company A merges 10 shares into 1 share, the shareholder holds 100/10=10 shares after the merger, the stock price will be 5*10=$50; The value of the shares held is 10*50=$500. If the customer buys 100 shares before the merger, he needs $500; yet, it requires $5000 for the same purchase of 100 shares after the merger. Due to the changes in the number of shares and market prices after the merger, long-term orders will not be able to take effect.
|Share Split||Increase the number of shares outstanding and spin off existing shares.(Par value of each stock ↓ Shareholders' shareholding ↑ Market value , total shareholders' equity remain unchanged)||If the customer holds 100 shares of company A and the current stock price is $5, the value of the stock held is 100*5=$500.If Company A split from 1 shares into 10 share, the shareholder holds 100*10=1000 shares after the splitting, the stock price will be $5/10 = $0.5 ; The value of the shares held is 1000*0.5=$500.If the customer sells 100 shares at $5 before the stock split, that equals $500; yet, if the 100 shares are sold after the stock split, only 1/10 of the original volume will be sold. Due to the changes in the number of shares and market prices after the merger, long-term orders will not be able to take effect.|
From here we can see that this type of corporate action will lead to an impact on long-term orders.
The long-term order will be withdrawn on the Ex-Date of the corporate action, before the opening of the respective market. Please submit a new order if necessary.