A two-for-one share split, and what it does to data that was already correct.
Before the split, on 2026-07-24
Position 1,000 shares Price 42.00 Market value 42,000
Price series ... 41.20 41.75 42.00
Split effective 2026-07-27, ratio 2:1
After
Position 2,000 shares Price 21.00 Market value 42,000
What breaks if nothing else changes:
Return series 42.00 -> 21.00 reads as a -50% day. It was a 0% day.
Moving averages Every window spanning the date is meaningless
Order in flight A GTC buy limit at 41.50 was near the market; it is now
20.50 above it and will fill instantly on the open
Stop loss A sell stop at 40.00 is now 19.00 above the market and
therefore already breached, so it fires on the open and
liquidates a position nobody asked to close
Reconciliation Custodian says 2,000, your book says 1,000, until the
entitlement is booked
The value is unchanged and every derived number is wrong. That is the whole
problem with corporate actions: they are not price moves, they are redefinitions
of the unit, so any series compared across the event has to be adjusted rather
than read.
The standard answer is to keep two price series — the traded price as it
happened, and an adjusted series carrying a cumulative adjustment factor — and to
be explicit about which one every consumer reads. Regulatory reporting and trade
reconstruction need the unadjusted price, because that is what actually traded.
Analytics, backtests and charts need the adjusted one. Systems that keep only
one are wrong for half their consumers.
The dates are the second half of the answer, and they are where the real
mistakes are. An action has an announcement date, an ex date, a record date and a
payment date, and they are not the same day; entitlement follows the record date
while the price adjusts on the ex date. Combine that with an unsettled trade
straddling the record date and the question of who is entitled becomes a genuine
dispute that a claims process exists to resolve.
Voluntary actions are worse than mandatory ones because they need a decision. A
tender offer or a rights issue has an election deadline, a default if nobody
responds, and a client who must be contacted, so the system owns a workflow with
a clock rather than a transformation.