Authorized Participant concept
Overview
Only a designated authorised participant — typically a sizeable institutional investor or market maker — may directly create or redeem ETF shares with the fund's issuer. These counterparties deal in 'creation units', standardised blocks of at least 25,000 ETF shares, which they exchange for either a basket of the fund's underlying assets or an equivalent cash amount. The ability to exploit price discrepancies between an ETF's market value and its net asset value allows APs to keep supply flexible and the share price closely aligned with NAV. Furthermore, the in-kind nature of these transactions underpins the tax efficiency that characterises ETFs.
Relations
No connections recorded for this entity in The Counterparty knowledge graph yet.
Frequently asked questions
What is Authorized Participant?
Authorized Participant is a concept tracked in The Counterparty knowledge graph.
What type of entity is Authorized Participant?
Authorized Participant is classified as a concept (concept) in The Counterparty knowledge graph.
Sources
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