What is a rights offering, and how does etoro handle them?

A rights offering - also known as a rights issue - is a corporate event in which a company gives its shareholders the option to purchase additional shares, in proportion to their current holdings.

Rights offerings may affect the stock rates on the day of the offering, as the company's net profit spreads across more shares.

How does etoro handle a rights offering?

We review each rights offering event on a case-by-case basis.

etoro does not support rights as an asset type, so when a company issues a rights offering, we attempt to liquidate the rights on the market and pay the average liquidation value to eligible clients as a cash dividend.

The liquidation price may change if the rights’ price is traded and fluctuates during the event, thereby affecting the final liquidation value. Units are typically liquidated after the pay date, depending on when they are received from the liquidity provider (LP).

If the rights are not supported by our providers, they may expire without value and you will not receive any compensation.

To give an example:

• A rights offering takes place on AAPL at a ratio of 1 right issued for every 2 AAPL shares held.
• We receive these rights on behalf of all eligible etoro clients as a lump sum, which we are able to sell for an average price per right of 100 USD (the average liquidation value).
• A client holding 1 AAPL share will receive a cash dividend of 50 USD in line with the ratio of the event, 1:2.

What if I hold a CFD?

• If you hold a buy position, you may receive the payment in your available balance.
• If you hold a short position, we will deduct the payment from your available balance.

The payment can be seen on your portfolio’s history page immediately after it is made, or the following day on your account statement.

Learn how Stock Margin positions are handled in the event of a rights offering