Didi shares surge despite plan to delist from the U.S.

[MongiIG]

Didi shares soared as much as 14% in U.S. premarket trading Friday after the company announced plans to delist from the New York Stock Exchange and pursue a listing in Hong Kong instead.

For the full article: CNBC

[marksiqi]

Does anyone know what happens to US stocks owned through IG if they become delisted? Do I still own the stocks through the issuer (IG) but just can't sell them?

[MongiIG]

On 04/12/2021 at 15:27, marksiqi said:

Does anyone know what happens to US stocks owned through IG if they become delisted? Do I still own the stocks through the issuer (IG) but just can't sell them?

Hi @marksiqi

What happens if the stock I am trading delists?

If you have an open leveraged position on a stock that delists, we’ll close your position at a level of zero and typically open a new position – called a ‘proceeds line’ – on your behalf which is untradeable, has no price and brings no value to your account. Once the company confirms there is no return to shareholders, which could take years, we will close your proceeds line position at the level of zero.

However, we won’t start this procedure as soon as a company announces it is delisting. The stock status will first need to be reviewed by our corporate actions and risk departments.

If you own shares in a company that delists on your IG leveraged account, we can close the position completely upon request and thus waive your right to potential future proceeds. On the other hand, if you hold those shares on your IG share dealing account, we can't close the position. This is because when you trade on leverage, you're trading over-the-counter with us - so we're able to take care of things like this in-house. However, when you buy or sell shares in a company, you're trading on an exchange that we have no control over.

You can also read the following article for a better understanding: what happens if a stock is delisted.

 

All the best - MongiIG

[marksiqi]

1 hour ago, MongiIG said:

Hi @marksiqi

What happens if the stock I am trading delists?

If you have an open leveraged position on a stock that delists, we’ll close your position at a level of zero and typically open a new position – called a ‘proceeds line’ – on your behalf which is untradeable, has no price and brings no value to your account. Once the company confirms there is no return to shareholders, which could take years, we will close your proceeds line position at the level of zero.

However, we won’t start this procedure as soon as a company announces it is delisting. The stock status will first need to be reviewed by our corporate actions and risk departments.

If you own shares in a company that delists on your IG leveraged account, we can close the position completely upon request and thus waive your right to potential future proceeds. On the other hand, if you hold those shares on your IG share dealing account, we can't close the position. This is because when you trade on leverage, you're trading over-the-counter with us - so we're able to take care of things like this in-house. However, when you buy or sell shares in a company, you're trading on an exchange that we have no control over.

You can also read the following article for a better understanding: what happens if a stock is delisted.

 

All the best - MongiIG

Thanks MongilG,

 

If I own the shares via the IG share trading account what happens to the shares then? Do I still own the shares through IG but am unable to buy or sell over the counter?

[AndaIG]

Hi @marksiqi

Thanks for the query. 

The shares will remain on your account until there is either a settlement or they are deemed worthless in the underlying market. Any delisted stock cannot be removed until this is replicated from our broker and we match their bookings accordingly across all clients. 

All the best, 

Anda

[marksiqi]

Hi @AndaIG

 

What would happen if the stock remains of value and the company is not in financial distress? For example if BABA on the NYSE becomes delisted. 

What do you mean by "replicated from our broker" and "match their bookings accordingly"?

 

Thanks so much for your help

[AndaIG]

Hi @marksiqi

Thanks for the response. 

After a delisting you still remain a shareholder of the company, however you can no longer sell shares on exchange. You would need to sell them over the counter (OTC). 

We operate under the custodial model. The shares are held on your behalf by our broker Citibank. Our broker is ultimately responsible for admin related to voluntary and involuntary corporate actions.

In your example above you would either need to transfer the shares to another broker that can sell them OTC or they would remain on your account up until there is either a settlement or they are deemed worthless by our broker. In this case we would replicate and match what our broker has done. 

I hope that helps, 

Anda

[marksiqi]

Hi @AndaIG

 

Yes it does, thanks for your help!

[MongiIG]

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