CME SSF Corporate Actions

1. What is a corporate action?

When the underlying stock of a CME Single Stock Future (SSF) undergoes a corporate action (such as a stock split, merger, or special dividend), your futures contract will be adjusted accordingly to maintain economic equivalence between the contract and the underlying stock.

2. Types of corporate actions

   #	Type	Impact on Your Position
   1	Integral Split	Your number of contracts increases in proportion to the split ratio, and the average open price per contract is adjusted accordingly. The contract symbol remains unchanged.
   2	Non-integral Split	Your existing positions are moved to a temporary contract symbol (e.g., SXXX1), while the original symbol continues to trade. Only the symbol changes; your average open price remains unchanged.
   3	Special Dividend	The contract continues to trade with an adjusted settlement price.
   4	Spinoff	Your existing positions are moved to a temporary contract symbol. The original symbol is relisted and continues to trade.
   5	Merger/Acquisition	Your existing positions are moved to a temporary contract symbol. The contract terminates after final settlement.
   6	Ticker Change	Your positions in the old symbol are automatically converted to the new symbol. The old symbol is no longer tradable.
   7	Delisting	The contract is cash-settled early at the final settlement price and then terminated.

3. What should I watch for during a corporate action?

1.   Trading restrictions

• While a corporate action is being processed, affected futures contracts will be temporarily suspended. Trading resumes when processing is complete.

• Trading is restricted from 4:00 PM CT on T-1 to 1:00 AM CT on T (about 5:00 AM – 2:00 PM SGT the next day).

Note: T is the corporate action effective date.

• If you already have GTC/GTD orders, they will be cancelled automatically when the restriction starts.

• If you don't want to hold a position through the corporate action, please close it before 4:00 PM CT on T-1.

2. Will I be notified?

If you hold the relevant SSF contracts before the corporate action effective date, we will provide in-app notifications for relevant updates, we also encourage you to regularly review the announcements on the stock page for completeness and to ensure that you are kept informed of the latest information.

 

CME SSF Dividend Withholding Tax

1. Why does holding an SSF generate withholding tax?

• Under Section 871(m) of the US Internal Revenue Code, non-US tax residents are subject to withholding tax on "dividend equivalent payments" from financial derivatives. The rate is 30%. The broker withholds the tax and reports and remits it to the IRS.

• CME SSFs are linked to US stocks and move 1:1 with the underlying stock (Delta = 1), so Section 871(m) applies. Even though you hold a futures contract rather than the shares themselves, the corresponding dividend withholding tax still applies.

2. What triggers withholding tax?

Dividend type	Description	Subject to withholding tax?
Regular Dividend	Regular cash dividends paid by the company. Expected regular dividends are already built into the SSF price (the contract is priced at a discount to reflect them). You won't receive cash, but the contract already includes a dividend equivalent.	Yes
Special Dividend	A one-time extra dividend declared by the company. The contract price is adjusted downward (your average open price changes), and withholding tax still applies.	Yes

3. How is withholding tax calculated?

Formula: Withholding Tax = Gross Long (number of long contracts) × Contract Multiplier (100) × Dividend per Share (USD) × Tax Rate (30%)

Example: You hold 1 standard AAPL futures contract (SAAPL). The underlying stock declares a $2.00 dividend per share. The contract multiplier is 100.

Withholding Tax = 1 × 100 × $2.00 × 30% = $60.00

Notes:

• Tax is calculated on long positions only. Short positions can't offset long positions.

• The standard stock futures contract (S prefix) has a multiplier of 100.

4. When is the tax deducted?

The tax is calculated and deducted on the ex-dividend date, based on your position at the close of T-1 (the day before the ex-dividend date).

5. What you can do

Option 1: Close early to avoid withholding tax

Close all long positions before market close on T-1 (the trading day before the ex-dividend date). If you close in time, no withholding tax will apply. Regular trading fees and market risk still apply.

Option 2: Keep your position and accept the withholding tax

If you choose to keep your position, please ensure your account has sufficient cash before market open on the ex-dividend date (T) to cover the tax.

If your account doesn't have enough cash on the ex-dividend date to cover the withholding tax, the tax will still be deducted. This may leave your account with a negative cash balance, and margin interest will apply. If this causes your account to go into Margin Call, it may further trigger a forced liquidation. We recommend depositing sufficient funds before the ex-dividend date to avoid margin interest and liquidation risk. In addition to reserving cash for the tax, please also monitor market conditions. During extreme volatility, we reserve the right to close your positions.

FAQ

Why is tax deducted even if my contract is at an unrealized loss?

Withholding tax is charged on the "dividend equivalent payment" in your position, not on whether your contract is in profit or loss. Unrealized P/L comes from price moves in your contract. Dividend withholding tax is a tax required by law. The two are calculated separately and don't affect each other.

I didn't receive a dividend. Why am I being taxed?

Holding an SSF is different from holding the underlying stock. You won't receive a cash dividend, but the economic value of the dividend is already built into the futures price:

• Regular dividends: already reflected as a pricing discount in the contract price

• Special dividends: reflected as a downward adjustment to the contract price (your average open price is adjusted)

Under Section 871(m) of the US tax code, this economic benefit is treated as if you received a dividend, so withholding tax must be deducted. This rule is meant to prevent using derivatives to avoid dividend tax.

Why can't the tax be deducted after I close my position?

Under IRS rules, if you hold a long position at the close of T-1 (the day before the ex-dividend date), the tax must be withheld on or before the ex-dividend date — no matter when you close your position.

How is the regular dividend reflected in the SSF contract price?

According to CME, the theoretical price of a single stock future is based on a cost-of-carry model. That model includes expected regular dividends on the underlying stock over the life of the contract, and shows up in the basis (the difference between the futures price and the stock price). For more details, see CME's official FAQ.