Equity Perps: Dividend Adjustment

A perpetual contract tracks the price of a stock, but holding the contract is not the same as holding the share. When a company pays a dividend, shareholders receive it and the stock opens lower on the ex-dividend date by roughly the dividend amount. A perp position sees only the price drop, not the payout. Left alone, that gap would penalize every long and gift every short for no economic reason.

StandX closes the gap with a dividend adjustment: a one time funding settlement, sized to the exact value of the dividend, paid from shorts to longs at the moment the underlying goes ex-dividend. After the adjustment, both sides are in the same position they would have been in had the dividend never existed.

What It Means for Your Position

• If you are long, you receive a credit equal to the dividend value of your position. Economically, you are made whole, just like a shareholder.
• If you are short, you pay that credit. This mirrors the spot market, where a short seller owes the dividend to the lender of the shares.
• The transfer is peer to peer between traders. StandX charges nothing and takes nothing from it.
• No action is required from you. The adjustment applies automatically to whatever position you hold at settlement time.

A Quick Example

Suppose a stock has a mark price of $200 and pays a $1.50 cash dividend. The adjustment rate is:

−1.50 / 200 = −0.75%

A trader long $20,000 notional receives $150. A trader short the same notional pays $150. At the same moment, the index and mark price drop by the dividend amount, so the net effect on both accounts is zero.

Sizing the Adjustment

The adjustment is applied as a negative funding rate. Its exact form depends on what the company actually distributes.

Most dividends are plain cash. In that case the rate is simply the dividend as a fraction of the mark price:

• D is the gross dividend per share, in the currency of the underlying (USD for US stocks, KRW for Korean stocks).
• M is the live mark price at the time of settlement.
• r = (ratio_new / ratio_old) − 1.0, the number of new shares granted per existing share. ratio_old is usually 1 but is never assumed to be, since corporate actions such as reverse splits can set it higher.

Rate = − D / M

Some companies distribute additional shares instead of cash. The rate then offsets the dilution:

Rate = − r / (1 + r)

ratio_old and ratio_new describe the conversion ratio of the corporate action: for every ratio_old shares held before the action, a holder ends up with ratio_new shares after it. Announcements phrase the same ratio in different ways, which is why the denominator is never assumed to be 1:

The rate is r / (1 + r) rather than r because the share price does not fall by the full dividend ratio. After the distribution, the same company value is spread across (1 + r) times as many shares, so the price moves from P to P / (1 + r), a gap of r / (1 + r) of the original price. For example, when a company grants 1 new share per existing share (r = 1), the price halves, so the gap is 50%, not 100%.

And on the rare occasion a company pays both at once, the two combine:

Rate = − (D / M + r) / (1 + r)

One important exception to normal funding rules: StandX caps regular funding at 4% per hour, but the dividend adjustment deliberately ignores this cap. A large special dividend can be worth more than 4% of the share price, and clipping the settlement would shortchange longs while handing shorts a riskless profit. Longs always receive the full mathematical value of the dividend.

When Settlement Happens

StandX settles funding every hour on every perpetual contract. The dividend adjustment does not need its own settlement event; it rides on the regular hourly funding settlement that lines up with the underlying market’s ex-dividend transition. Venues with longer funding cycles have to temporarily compress them around ex-dates. On StandX the schedule never changes.

The settlement hour depends on the underlying market:

• US stocks trade on StandX through the overnight session, so the contract is already ex-dividend before the ex-date begins in New York. Settlement takes place at 20:00 ET on the calendar day before the ex-date.
• Korean stocks have no overnight session, so everything happens on the ex-date itself. Settlement takes place at 08:00 KST on the ex-date.

Timeline: US Stocks

All times are US Eastern Time (ET).

Timeline: Korean Stocks

All times are Korea Standard Time (KST).

Safeguards Around the Settlement

The dividend amount and settlement time are public knowledge, which makes the settlement a target for gaming. Thirty minutes before settlement, two temporary protections switch on:

1. The contract enters reduce-only mode. Existing positions can be closed but new exposure cannot be opened, so nobody can jump in purely to farm the known payment.
2. The allowed deviation between the mark price and the index tightens to 1%, keeping the mark firmly anchored through the price gap.

Both protections lift one minute after the settlement completes, and the contract returns to normal trading.