FYI: Authorized participants (APs) are one of the major parties at the center of the ETF creation/ redemption mechanism, and as such, they play a critical role in ETF liquidity.
In essence, APs are ETF liquidity providers that have the exclusive right to change the supply of ETF shares on the market. When they spot a shortage of ETF shares in the market, they create more shares. Conversely, when there’s an excess supply of ETF shares on the market, they reduce the number of shares by way of the creation and redemption mechanism.
Regards,
Ted
Authorized participants (APs) are one of the major parties at the center of the ETF creation/ redemption mechanism, and as such, they play a critical role in ETF liquidity.
In essence, APs are ETF liquidity providers that have the exclusive right to change the supply of ETF shares on the market. When they spot a shortage of ETF shares in the market, they create more shares. Conversely, when there’s an excess supply of ETF shares on the market, they reduce the number of shares by way of the creation and redemption mechanism.
Regards,
Ted
https://www.etf.com/publications/etfr/etf-education-may-2019
