Ex-date
The ex-dividend date or ex-date is the date at which a stock begins to trade without the new owner receiving the dividend. For an exchange-traded stock, it is set by the exchange; for OTC stocks, it is set by FINRA. This is the date that most directly affects investors.
The ex-date is determined by counting backwards from the record date. For regular way settlement, the ex-date is two business days prior to the record date. Since stocks typically settle in three days, an owner of stock must complete a purchase at least three business days prior to the record date to receive a dividend. The ex-dividend date will be too late for the purchase to settle in time to receive the dividend.
If a buyer buys stock on or after the ex-date, the buyer will not receive the dividend. Rather, the seller will receive the dividend.
Ex-dates can also apply to warrants, rights, and ADRs – any type of security that carries additional earnings (e.g., stocks that carry dividends, bonds that carry interest rates, etc.). For any of these securities, if a buyer buys a security on or after the ex-date, the buyer will not receive the additional earnings associated with it.
The following rules apply to ex-dates of dividends and warrants:
- • For dividends under 25% of the market value of the security, the ex-date