A subscription right is a privilege granted to an existing shareholder of a corporation to subscribe to shares of common stock before it is offered to the public. The terms of the rights, meaning the number of rights required to purchase 1 new share and the subscription price, are defined by the company and will be outlined in the voluntary corporate action overview.
When participating in a subscription rights offering, IBKR clients must have available withdrawable funds to pay for the anticipated new shares at the time IBKR submits the election to our clearing agent ("the street"). Clients whose accounts do not hold sufficient available funds may have their election reduced or rejected.