Wilwak....
I think I have some good news for you.
If you refer back to your original post you will read the following in the letter you received from IG Index;
We are writing to you to inform you of an adjustment made to your JUN09 Invesco UK Property Income Tst position. Invesco UK Property Income Tst will probably not be paying the dividend expected by our equity support department.
Therefore all open spread bets will be rebooked to amend your opening level by 3.038 points. At the same time we will amend the levels of our futures contracts by 3.038 points. This will mean no profit and loss difference to your positions.
You will note that they use the words “probably not be paying the dividend expected”.
This is important – you will see why shortly.
The firm moves on to quote section 28 from the Customer Agreement. They state the following;
28. Adjustments and takeovers
(1) If any Financial Index becomes subject to possible adjustment as the result of any of the events set out in Term 28(2) below (a "Corporate Event") affecting a related financial instrument, we will determine the appropriate adjustment, if any, to be made to the size and/or value and/or number of the related Bet(s) (and/or to the level of any Order) to account for the diluting or concentrating effect necessary to preserve the economic equivalent of the rights and obligations of the parties in relation to that Bet immediately prior to that Corporate Event, to be effective from the date determined by us.
(2) The events to which Term 28(1) refers are the declaration by the issuer of a financial instrument (or, if the financial instrument is itself a derivative, the issuer of the security underlying that instrument) of the terms of any of the following:
(5) In the event that there is declared or paid in respect of any financial instrument a special dividend or a dividend that is unusually large or payable by reference to an ex-dividend date that is unusually early or late (in each case, having regard to dividend payments in previous years in respect of that same financial instrument), we may make an appropriate adjustment (including a retrospective adjustment) to the Opening Level and/or the Stake of a Bet that relates to that financial instrument.
The firm are therefore implying that they can alter your entry level because they are now considering that the dividend is not going to be paid. However, this is pure conjecture on their part since there does not appear to be such an announcement from Invesco themselves.
Read Term 28 of the Customer Agreement again!
In order to invoke their implied right to amend your bet level there has to be a ‘Corporate Event’ as specified in Term 28(2). Term 28(2) which sets out that such a ‘Corporate Event’ refers to (and I quote);
A “declaration by the issuer of a financial instrument” (ie Invesco)
So far as I can see there has been no such declaration by Invesco. I’ve checked their RNS logs and I cannot find that they have made such a statement. I therefore conclude, based on the lack of RNS and based on IG Index’s own wording in their letters to you (their use of the words ‘probably’), that the firm cannot invoke Term 28 since they cannot satisfy the relevant criteria required. In their letter to you they say that they are invoking their rights under Term 28 and move on to quote Term 28(2) – they don’t however check that Term 28(2) is being correctly satisfied. If there is no such news declaration from Invesco then the firm would appear to have breached their contract with you.
My advice would be to close the bet at the prevailing price and then argue the toss about getting the adjustment reversed. You would appear to have a win / win situation since they are going to have to reverse the price adjustment since they don’t appear to be able to satisfy the conditions of their own Customer Agreement. You would then pocket the difference between today’s price and the price which you opened at.
Happy days
Steve.
:clap:
