This guide explains how cash dividends received by a user can be automatically reinvested into the market.
Reinvestment refers to the process of using cash received from a user’s security holdings (such as an income distribution or a dividend payment) to automatically invest the cash proceeds into a predefined instrument. Respective cash proceeds can stem from different events in a financial instrument’s lifecycle. Because the underlying process of cash proceeds and automated reinvestments does not change materially, we refer to those instrument events and related payments as "dividend payments" for brevity.
If automatic reinvestment is enabled for the accounts of your users, any cash inflow as a result of a dividend payment is automatically converted into a buy order for that instrument. The reinvestment process works on the basis of net cash proceeds, i.e., possible withholding taxes on any cash income are automatically deducted before the reinvestment process begins.
The configuration for enabling automated reinvestments for your users is set on a global client level, meaning that reinvestments can be either turned on or off for all your users.