Long-term orders remain valid until the specified date, but their execution may be affected by corporate actions. Here’s how it works.
1. What is a long-term order?
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.
2. Will corporate actions have an impact on the execution of long-term 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 with 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 |
Example: 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, If the customer buys 100 shares before Due to the changes in the number of shares |
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 |
Example: If the customer holds 100 shares of company A If Company A split from 1 shares into 10 share, If the customer sells 100 shares at $5 before the stock split, Due to the changes in the number of shares and |
3. If I have submitted a long-term order before the Ex-Date of relevant corporate action, how will Longbridge handle such a situation?
The long-term order will be cancelled before the US market opens on the Ex-date of the corporate action. Please re-issue the order if necessary.
Disclosures
This article is for reference only and does not constitute any investment advice.
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Registered with the Monetary Authority of Singapore (MAS), Long Bridge Securities Pte. Ltd. is a Capital Markets Services Licence holder and Exempt Financial Adviser (Licence No. CMS101211).
A licensed corporation recognized by the SFC (CE No. BPX066). Holder of License Types 1 (Dealing in Securities), 2 (Dealing in Futures Contracts), 4 (Advising on Securities) and 9 (Asset Management). Also a registered HKEX participant and HKSCC participant.
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