Shorting stock on Record Date?

J

jayr95241

Hi everyone, when is a short seller required to pay out a dividend?

For example, ABC has a Ex dividend date of 9/29 and a Record Date of 9/30....
If I sell on the record date 9/30, am I required to pay out dividend? If so, can I short the day after record on 9/31 without being responsible for dividend?

I've tried googling but it somewhat confusing since settlement is T+2
 
If you are short coming into the X-Date, you will owe the dividend. In your example, shorting the stock on either the 29th or 30th would not have you being short prior to the x-date. You would have had to short it on the 28th or earlier and held it overnight into the 29th.
 
Don’t worry about the ‘record date’- it is nearly a ledger date based on the ex-date and ‘normal settlement cycle (I.e. t+2) as a way for the corporation to know who to send the dividends too, in the event of a mistake or special settlement (non-electronic trades) due notices will be sent between brokers to properly account for discrepancies.

As Robert noted- all that matters is Ex-date. On or after ex-date it’s trading without dividend, before ex-date all trades are privies to the upcoming dividend, longs will be receiving it and shorts will owe it.
 
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