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It is worth remembering that the ETF market takes 10% of the global stock market. And although in recent years the ETF market is growing, it is still at times less than his older brother — the market of mutual funds (mutual) funds.

Volatility depends on investment flows. She jumps when investors run from some kind of asset (shares, bonds, gold). Ultimately, the decision on the direction of funds in certain assets is accepted by the investor itself.

Investor’s tool can be any please: pairs of mutual funds, ETF shares, specific shares or bonds. Choosing a particular path, the investor will encounter a different degree of transparency depending on the tools selected. For example, in mutual funds there is no opportunity to find out the exact composition of assets or understand the value of the share during the day.

If the investor uses ETF, it can follow the exchange quotes during the trading day. Sometimes what is happening in the markets due to ETF is called «democratization». Now the final investor receives the same information about the market fluctuations, how many professional participants in the stock market.

Authorized participants (differently — authorized persons) are professional intermediaries between the Foundation and the ETF finite buyers. An authorized participant has the right to subscribe and repay the fund’s shares directly with the participation of the Fund (or Investment Manager). Each ETF is usually several authorized participants, it makes it possible to effectively organize arbitration (risk-free operations that allow to align the price of the stock shares and the cost of assets) and reduces risks.

Usually by authorized participants is the financial organization: a bank or broker, which is actively present on the market. Their goal is to get economic benefits. An authorized participant is still a mediator when trading mutual funds, separate shares or ETF. The Commission for executing transactions and the possibility of arbitration is often referred to as the advantages of presence in both markets: both on the primary and secondary. Indeed, the possibilities of arbitration and commissions for transactions are available only for authorized participants, subject to access to the primary market, where the creation and repayment of ETF shares occurs. That is why ETF ecosystem assumes several authorized participants. The ETF platforms apply a model with several authorized participants who compete, eliminating the dependence on one intermediary and ensuring their interchangeability.

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