ETF Creation process

ETF Creation process

Market-makers are the only market participants authorised to create units with ETF fund managers, but they have to get the ETF shares from the fund manager. The way they do this is through a creation/redemption process. This video helps you understand the creation/redemption processes, along with their benefits and disadvantages.
Overview

Market-makers are the only market participants authorised to create units with ETF fund managers, but they have to get the ETF shares from the fund manager. The way they do this is through a creation/redemption process that involves the market-maker exchanging the equivalent ETF securities, rather than cash, to the fund manager in exchange for ETF shares.

Key learning objectives:

  • Understand the creation/redemption process

  • Understand the benefits and disadvantages of the creation/redemption process

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Summary
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Expert
Gontran de Quillacq

Gontran de Quillacq

Gontran de Quillacq has 25 years of experience in derivatives trading, portfolio management, proprietary trading, structured products and investment research. He has worked with top-tier banks and hedge funds in both London and New York.

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