Handling Stock Splits

Corporate actions, such as stock splits and reverse splits, require precise handling for tokenized assets to ensure price continuity and avoid disruptions. These events alter per‑share pricing while leaving the underlying economic exposure unchanged. They can produce abrupt per‑share price moves and must be handled carefully to avoid incorrect onchain price computations and unexpected liquidations.

In the v10 report schema, continuity is preserved by staging a multiplier change with a scheduled activationDateTime so the Theoretical Price (price * currentMultiplier) remains continuous. Split ratios are typically known in advance, but activation may occur while markets are closed, so some external price sources may not reflect the split until trading resumes.

Guiding principle

Follow these principles when handling multiplier changes during corporate actions:

1. The protocol considers the Theoretical Price as price * currentMultiplier.
2. Ahead of the event, newMultiplier and activationDateTime are staged.
3. At activationDateTime (Unix), currentMultiplier becomes newMultiplier.
   • The underlying price from traditional markets should start reflecting the split the next time trading opens, so at the next price update, the Theoretical Price should remain continuous.

Example (10:1 split, AAPL)

The following hypothetical scenario demonstrates how a 10:1 AAPL stock split is handled through the staged multiplier system, showing the progression from announcement through protocol reopening with proper price continuity maintained throughout.

The following timeline outlines the key events and actions taken at each stage:

• T-2: Split announcement and multiplier staging
• T-1: Protocol preparation and monitoring setup
• T0: Multiplier activation (split effective date)
• T+1: Market reopening with adjusted prices
• T+2: Protocol resumption after verification

Announcement (T-2)

A 10:1 AAPL stock split is announced. The report updates to stage the split:

• newMultiplier is set to 10x the value of currentMultiplier.
• activationDateTime is set to the Unix timestamp of the split.
• currentMultiplier is unaffected until activation.

Protocol engagement (T-1)

At this stage, users are advised to monitor for changes in activationDateTime and inspect the upcoming change to prepare appropriate action, such as preparing the protocol for a pause around the activationDateTime in order to ensure appropriate handling of the stock split.

Activation (T0)

When the provider applies the split, the report updates:

• newMultiplier remains the current value.
• activationDateTime is set to 0.
• currentMultiplier is updated to the same value as newMultiplier.

If activation occurs while the underlying market is closed, prices may still show the pre‑event last trade. Do not compute the Theoretical Price during this pre-adjustment window. Monitor marketStatus and keep the protocol paused until the first post‑event trade prints and the Theoretical Price is continuous.

Market reopening (T1)

The stock split has taken effect. Generally, this occurs after the market closes or over the weekend, meaning price may not yet reflect the new economic value per share. Upon the market reopening, price should start reflecting the split-adjusted value.

Protocol reopening (T2)

Users should pause markets before activationDateTime and keep them paused until:

• The market has reopened (monitor marketStatus)
• price has updated in line with the split ratio (e.g., 10:1)
• You have confirmed that the Theoretical Price matches expectations

After all the above checks have been confirmed, users can unpause their protocol and continue and resume normal operation.

Activation-time convention

Each tokenized asset issuer sets its own activation time. For example, the xStocks default activationDateTime is 00:00 UTC on the effective date. Once activationDateTime is reached, currentMultiplier becomes newMultiplier.

Because underlying venues may be closed at activation, some external price sources may not reflect the split immediately. If activationDateTime occurs while the underlying market is closed, the report’s currentMultiplier will become newMultiplier; however, price can remain at the pre-event level until the market reopens. During this post-activation, pre-adjustment interval (after the multiplier has changed but before the underlying price updates), the Theoretical Price can be incorrect. Use marketStatus to pause until price reflects the event.

Integrator risk & handling

Computing price * currentMultiplier when the price has not adjusted (e.g., market closed) can produce large errors. It is critical to ensure that the Theoretical Price is again reflective of actual market conditions before allowing live trading.

Treat any multiplier change (splits, dividends, etc) and activationDateTime as a maintenance window; pause/guard the protocol, then verify post-activation conditions before resuming.

For broader guidance around market hours and event handling, refer to the Market Hours guidance.