# Corporate Actions and Equity Derivative Adjustments

> Handling corporate actions is the work of checking changes to the terms of derivatives on a stock when its issuer announces a stock split, merger, or similar event, and booking them in the records used for valuation and collateral. For listed options, the exchange and the clearing house decide the adjustment. For over-the-counter trades, the method of adjustment is checked trade by trade.

- URL: https://www.derivatives-compass.org/en/internal-operations/corporate-actions/
- Area: Internal Operations › Daily Operations
- Last reviewed: 2026-10-23
- 日本語版: https://www.derivatives-compass.org/ja/internal-operations/corporate-actions/index.md

## Key points

- Adjustments keep option holders from suffering a significant disadvantage because of a stock split, merger, or similar event.
- Depending on the event, the strike price, the number of contracts, and the delivery unit change in different ways.
- A listed option's adjustment is, in principle, common to all contract months, and the method for an over-the-counter trade is specified trade by trade.
- The core check is whether the booked values match the announced adjusted values.
- If a change is not booked, the buyer's and seller's valuations of the same trade differ from the actual economics.

In managing options or swaps on stocks, an announcement of a stock split or merger by the issuer can mean revisiting the terms used for booking, valuation, and collateral calculations. Knowing where to look in the exchange announcement or the contract for the adjusted terms helps catch changes that were missed.

## Purpose of adjustments and the events covered

A [corporate action](https://www.derivatives-compass.org/en/glossary/corporate-action/) is an event carried out by the issuer of a stock, such as a stock split or a change in the trading unit, that affects the value or the trading terms of the security. An exchange adjusts option terms so that such an event does not leave option holders significantly worse off[^ca-def].

For [securities options](https://www.derivatives-compass.org/en/glossary/single-stock-option/) on Osaka Exchange, the adjusted events are stock splits and free allotments of shares, allotments for consideration and free allotments of share options, reverse splits, changes in the trading unit, company splits, mergers, share exchanges and share transfers, delistings, and spin-offs (distributions in kind)[^ca-ose-table]. The by-laws of OCC (Options Clearing Corporation), which clears listed options in the US, likewise list stock dividends, stock splits, reverse splits, rights offerings, reorganizations, mergers, and liquidations as events that can trigger adjustments[^ca-occ-events].

## Effects of each event on trade terms

Osaka Exchange changes some of three items for each event: the [strike price](https://www.derivatives-compass.org/en/glossary/strike-price/), the [open position](https://www.derivatives-compass.org/en/glossary/open-interest/) (the number of option contracts held), and the delivery unit (the number of shares traded when one option contract is exercised)[^ca-ose-table]. The adjustment for stock splits is covered on the [Single Stock Options](https://www.derivatives-compass.org/en/equity/single-stock-options/) page. The main events other than splits are as follows.

| Event                                                                         | Strike price                                                                                                                                          | Position and delivery unit                                                                         |
| ----------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- |
| Reverse split (A shares become 1 share)                                       | Multiplied by A                                                                                                                                       | Position unchanged; delivery unit divided by A                                                     |
| Allotment for consideration, free allotment of share options                  | Lowered to a weighted average of the old strike price and the payment amount, using the allotment ratio                                               | Position or delivery unit increased according to the allotment ratio                               |
| Company split                                                                 | Lowered by the ratio of the [underlying](https://www.derivatives-compass.org/en/glossary/underlying-asset/) price before and after the ex-rights date | Position or delivery unit increased by the same ratio                                              |
| Spin-off (distribution in kind)                                               | Lowered by the ratio of the market capitalizations of the original company and the distributed company                                                | Position or delivery unit increased by the same ratio                                              |
| Merger, share exchange, or share transfer in which positions are carried over | Changed by the merger ratio                                                                                                                           | Position or delivery unit changed by the same ratio                                                |
| Change in the trading unit                                                    | Not addressed in the document                                                                                                                         | Delivery unit changed by the same ratio as the trading unit; position changed by the inverse ratio |

Where the table says "position or delivery unit," the position changes if the ratio is a whole number, and the delivery unit changes if it is not[^ca-ose-table]. A change in the trading unit changes the delivery unit to match, so the position changes by the inverse ratio. In the document's example, when the trading unit changes from 100 units to 10, the delivery unit goes from 100 to 10 and the position from 25 contracts to 250. The total number of units delivered on exercise stays at 2,500 either way[^ca-ose-unit].

## Adjustments to listed options

### Osaka Exchange and Japan Securities Clearing Corporation

Osaka Exchange announces how it will handle securities options for each event that requires an adjustment, and collects the events on a list page[^ca-ose-news]. The [Japan Securities Clearing Corporation](https://www.derivatives-compass.org/en/glossary/jscc/) (JSCC) may also issue notes on clearing and settlement for the same event.

The ex-rights date is the first day on which buying the stock no longer carries entitlement to rights such as dividends or stock splits. The Tokyo Stock Exchange sets it for the underlying stock[^ca-exrights]. In principle, Osaka Exchange makes the adjustment on that date (a change in the trading unit changes the delivery unit and the position, and is adjusted on the business day before the effective date)[^ca-ose-limits].

A JSCC notice of September 8, 2025, covering a spin-off in which a listed company distributes the shares of a subsidiary to its shareholders, set out three points[^ca-jscc]. This handling was given for this event individually and differs from the general adjustment date of Osaka Exchange.

- Options outstanding on the business day before the ex-rights date are adjusted from the business day after it, using a ratio to change the strike price and the delivery unit. For this reason, positions are not adjusted.
- Trading in options on the stock is suspended on the ex-rights date.
- The underlying price used to calculate the settlement price on the ex-rights date is the closing price that day adjusted by the ratio. The ratio is the original company's share of the combined market capitalization, calculated from the closing prices and shares outstanding on the ex-rights date.

Osaka Exchange also reviews the position limits, the reporting threshold for large positions, and the hard-block setting for J-NET trades to match the adjustment. In principle, the adjustment applies to trades in all contract months, including flex contract months[^ca-ose-limits].

When the underlying stock is delisted because of a merger or similar event, a contract month whose last trading day falls on or after the day before the delisting date has its last trading day moved up to two days before the delisting date. New contract months whose last trading day would fall on or after the effective date of the merger are not set[^ca-ose-delist].

If the stock of a company that remains listed is the underlying of options, Osaka Exchange may carry over the positions in the options on the delisted stock to the options on the surviving stock. The merger rows in the table are the adjustments made when positions are carried over[^ca-ose-limits].

> **For operations and accounting: When positions are carried over**
>
> When Osaka Exchange decides to apply the carry-over, it announces this by notice and on its website, around the day it announces the delisting[^ca-ose-limits]. The notice shows whether a carry-over applies.

### OCC in the US

For listed options in the US, OCC decides whether to adjust and what the adjustment is. Under Article VI, Section 11 of its By-Laws, OCC decides event by event, considering fairness to buyers and sellers, maintenance of a fair and orderly market, consistency of interpretation and practice, and efficiency of exercise settlement. The Securities Committee, made up of representatives of the options markets and of OCC, sets general policies for types of events[^ca-occ-factors].

The treatment of dividends is set out in specific terms in the OCC By-Laws. According to the 2024 filing, OCC does not adjust for regular cash dividends such as quarterly dividends. It also does not adjust for a special cash dividend below USD 0.125 per share (or USD 12.50 per contract for contracts whose unit is larger than 100 shares)[^ca-occ-dividend].

## Adjustments to over-the-counter trades

For [over-the-counter](https://www.derivatives-compass.org/en/glossary/otc-derivative/) equity options and [equity swaps](https://www.derivatives-compass.org/en/glossary/equity-swap/) (including [total return swaps](https://www.derivatives-compass.org/en/glossary/total-return-swap/)), FIX, a trade data protocol, has a field that specifies, trade by trade, how adjustments are made when an extraordinary event such as a corporate action occurs. The field takes one of two values: the calculation agent adjusts the terms of the trade, or the trade follows the adjustment made by the exchange where options on the underlying are listed. In the FIX documentation, the calculation agent is the party with the right to adjust the terms of the trade after the event[^ca-otc].

| Item                       | Listed options (Osaka Exchange)                              | Over-the-counter trades                                                                       |
| -------------------------- | ------------------------------------------------------------ | --------------------------------------------------------------------------------------------- |
| Who decides the adjustment | The exchange                                                 | The value of the FIX field distinguishes the calculation agent from the exchange's adjustment |
| Basis of the adjustment    | The exchange's documents and its announcement for each event | The method of adjustment specified for each trade                                             |

## Flow of the work

This is an example of the flow from the adjustment of a listed option to the update of a financial institution's records.

**Figure 1: From the adjustment of a listed option to the update of records**

When Osaka Exchange adjusts an issue, it announces the method, in principle, at least two weeks in advance (step 2)[^ca-ose-limits]. For over-the-counter trades, the method of adjustment specified for the trade applies in place of steps 2 and 3.

Examples of items to check in steps 4 to 6 are as follows.

- Step 4 (judging the effect): whether the institution holds listed options, over-the-counter trades, or swaps on the stock, and what type of event it is.
- Steps 5 and 6 (booking and reconciling): whether the strike price, the position, and the delivery unit match the announced adjusted values.

> **For systems professionals: How to hold adjustment records**
>
> In a design that records adjustments, the terms before the adjustment are not overwritten. The adjusted strike price, position, and delivery unit are held with the effective date and a reference to the announcement they came from. With this approach, valuation and reporting before and after the ex-rights date can be reproduced using the terms of the time.

## Check items and the effect of a missed change

The adjusted terms are checked against the announcement or the terms of the trade on the following items.

| Check item                                         | Checked against                                   | Common mistake                                                                                                                                 |
| -------------------------------------------------- | ------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- |
| The event and the adjustment date                  | Exchange announcement; terms of the trade         | A change in the trading unit is the one case adjusted on the business day before the effective date, not on the ex-rights date[^ca-ose-limits] |
| Strike price, position, and delivery unit as a set | Exchange announcement                             | Confusing events that change the position with events that leave it unchanged and change only the strike price and delivery unit               |
| Adjustment of over-the-counter trades              | The method of adjustment specified for each trade | Confusing whether the calculation agent adjusts or the exchange's adjustment is followed                                                       |

The values used for valuation and collateral come from the adjusted terms, so a misbooked term affects valuation and collateral too. Collateral calculation is covered on the [Collateral Operations](https://www.derivatives-compass.org/en/internal-operations/collateral-operations/) page.

Consider a hypothetical example in which 2 shares become 1 in a reverse split, to see the effect of a missed change. Differences exclude the premium. Before the reverse split, the position was 1 contract of a call with a strike price of 1,000 yen and a delivery unit of 100 shares, and the stock price was 1,200 yen. Suppose the company's value is unchanged after the reverse split and the stock price becomes 2,400 yen. Adjusted using the formulas in the table, the strike price becomes 2,000 yen, the delivery unit becomes 50 shares, and the position stays at 1 contract.

| Item                              | Before the reverse split | After (adjusted) | After (adjustment missed) |
| --------------------------------- | -----------------------: | ---------------: | ------------------------: |
| Strike price                      |                1,000 yen |        2,000 yen |                 1,000 yen |
| Delivery unit                     |               100 shares |        50 shares |                100 shares |
| Stock price                       |                1,200 yen |        2,400 yen |                 2,400 yen |
| Amount paid to buy on exercise    |              100,000 yen |      100,000 yen |               100,000 yen |
| Value of shares received          |              120,000 yen |      120,000 yen |               240,000 yen |
| Buyer's gain or loss on exercise  |               20,000 yen |       20,000 yen |               140,000 yen |
| Seller's gain or loss on exercise |              −20,000 yen |      −20,000 yen |              −140,000 yen |

If the adjustment is booked, the gain on exercise is the same 20,000 yen as before the reverse split. If it is missed, the buyer's records show a gain 120,000 yen larger than the actual one, and the seller's records show a loss 120,000 yen larger. If an adjustment is missed for a stock split, the direction is reversed, and the buyer's records look worse than the actual outcome.

Strike price × delivery unit × position is 100,000 yen whether the adjustment is made correctly or missed, the same as before the reverse split. Reconciling this product cannot reveal the omission. The omission shows up when the booked strike price and delivery unit are compared with the announced adjusted values (2,000 yen and 50 shares). Booking errors like this are one example of [operational risk](https://www.derivatives-compass.org/en/glossary/operational-risk/), since they can lead to losses from flaws in business processes.

[^ca-def]: [大阪取引所「有価証券オプション取引 コーポレートアクション発生時の対応について」](https://www.jpx.co.jp/derivatives/products/individual/securities-options/nlsgeu000002pal9-att/Individual_Securities_Options_Market_Measures_Taken_in_Response_to_Corporate_Actions_J.pdf) (Osaka Exchange, "Securities Options: Measures Taken in Response to Corporate Actions," in Japanese), section 1, "Option Adjustments for Corporate Actions" (p. 2 of the document).

[^ca-ose-table]: [大阪取引所「有価証券オプション取引 コーポレートアクション発生時の対応について」](https://www.jpx.co.jp/derivatives/products/individual/securities-options/nlsgeu000002pal9-att/Individual_Securities_Options_Market_Measures_Taken_in_Response_to_Corporate_Actions_J.pdf) (Osaka Exchange, "Securities Options: Measures Taken in Response to Corporate Actions," in Japanese), section 2.1, the table of corporate actions subject to adjustment and adjustment methods (pp. 3–4 of the document).

[^ca-occ-events]: [Federal Register notice on OCC's interpretative guidance](https://www.govinfo.gov/content/pkg/FR-2024-03-06/pdf/2024-04698.pdf) (March 6, 2024; 89 FR 16043), the beginning of Section II(A).

[^ca-ose-unit]: [大阪取引所「有価証券オプション取引 コーポレートアクション発生時の対応について」](https://www.jpx.co.jp/derivatives/products/individual/securities-options/nlsgeu000002pal9-att/Individual_Securities_Options_Market_Measures_Taken_in_Response_to_Corporate_Actions_J.pdf) (Osaka Exchange, "Securities Options: Measures Taken in Response to Corporate Actions," in Japanese), section 3.2, "Change in the delivery unit" (pp. 15–16 of the document).

[^ca-ose-news]: [大阪取引所「有価証券オプションの取扱い（2025年9月30日調整分）」](https://www.jpx.co.jp/news/2020/20250908-01.html) (Osaka Exchange, "Handling of Securities Options (adjustment on September 30, 2025)," in Japanese) (September 8, 2025). It states the handling and links to the list of corporate actions.

[^ca-exrights]: [日本取引所グループ「用語集 権利落」](https://www.jpx.co.jp/glossary/ka/134.html) (Japan Exchange Group, glossary entry on ex-rights, in Japanese). It says that for trades settled after the day following the date that fixes which shareholders receive the rights, the buyer does not receive them, which is called ex-rights.

[^ca-jscc]: [日本証券クリアリング機構「ソニーグループ（株） 株式に係る有価証券オプション取引の取扱いに関する留意事項について」](https://www.jpx.co.jp/jscc/information/news/of_20250908.html) (Japan Securities Clearing Corporation, "Notes on the handling of securities options on the shares of Sony Group Corporation," in Japanese) (September 8, 2025), items 1 and 2.

[^ca-ose-limits]: [大阪取引所「有価証券オプション取引 コーポレートアクション発生時の対応について」](https://www.jpx.co.jp/derivatives/products/individual/securities-options/nlsgeu000002pal9-att/Individual_Securities_Options_Market_Measures_Taken_in_Response_to_Corporate_Actions_J.pdf) (Osaka Exchange, "Securities Options: Measures Taken in Response to Corporate Actions," in Japanese), section 2.2, "Notes on Issue Adjustments" (p. 4 of the document). It covers the ex-rights date, the timing of the announcement of the adjustment method, the adjustment of all contract months, the review of position limits, and the carry-over of positions and its notice.

[^ca-ose-delist]: [大阪取引所「有価証券オプション取引 コーポレートアクション発生時の対応について」](https://www.jpx.co.jp/derivatives/products/individual/securities-options/nlsgeu000002pal9-att/Individual_Securities_Options_Market_Measures_Taken_in_Response_to_Corporate_Actions_J.pdf) (Osaka Exchange, "Securities Options: Measures Taken in Response to Corporate Actions," in Japanese), the section on delisting (pp. 16–17 of the document; headed 3.3 in the body and 3.4 in the table of contents).

[^ca-occ-factors]: [Federal Register notice](https://www.govinfo.gov/content/pkg/FR-2024-03-06/pdf/2024-04698.pdf) (89 FR 16043–16044), Section II(A) and "Background." The notice describes the Securities Committee as consisting of "each of the U.S. options markets and a representative of OCC."

[^ca-occ-dividend]: [Federal Register notice](https://www.govinfo.gov/content/pkg/FR-2024-03-06/pdf/2024-04698.pdf), "Background" (89 FR 16044). The notice says that regular dividends can be priced into option premiums when the issuer's policy is public.

[^ca-otc]: [FIX Dictionary, LegExtraordinaryEventAdjustmentMethod](https://www.onixs.biz/fix-dictionary/latest/tagNum_2606.html) (tag 2606; FIX 5.0 SP2 EP312). Value 0 is "Calculation agent" (which has the right to adjust), and value 1 is "Options exchange" (the trade follows the adjustment made by the exchange where options on the underlying are listed).

## Sources

- [有価証券オプション取引 コーポレートアクション発生時の対応について（第 2 版、2025 年 8 月）](https://www.jpx.co.jp/derivatives/products/individual/securities-options/nlsgeu000002pal9-att/Individual_Securities_Options_Market_Measures_Taken_in_Response_to_Corporate_Actions_J.pdf) — 大阪取引所
- [Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Concerning the Option Clearing Corporation's Interpretative Guidance on Contract Adjustments for Cash Dividends and Distributions（Release No. 34-99641; File No. SR-OCC-2024-003。89 FR 16043）](https://www.govinfo.gov/content/pkg/FR-2024-03-06/pdf/2024-04698.pdf) — Federal Register（U.S. Securities and Exchange Commission の告示）
- [有価証券オプションの取扱い（2025年9月30日調整分）](https://www.jpx.co.jp/news/2020/20250908-01.html) — 大阪取引所
- [用語集「権利落（けんりおち）」](https://www.jpx.co.jp/glossary/ka/134.html) — 日本取引所グループ
- [【投資者の皆様へ】ソニーグループ（株） 株式に係る有価証券オプション取引の取扱いに関する留意事項について（2025 年 9 月 8 日）](https://www.jpx.co.jp/jscc/information/news/of_20250908.html) — 日本証券クリアリング機構
- [FIX Dictionary, LegExtraordinaryEventAdjustmentMethod（タグ 2606。FIX 5.0 SP2 EP312）](https://www.onixs.biz/fix-dictionary/latest/tagNum_2606.html) — OnixS（FIX Trading Community の FIX 仕様の辞書の再掲）