In this section we provide information on the ETF Capital Markets structure, including the key players in the trading ecosystem, the creation and redemption process and how our Capital Markets Team develops and maintains market quality across our official exchange listings.
Gain an understanding of the roles and responsibilities of the capital markets players involved in the ETF ecosystem, including authorised participants, market makers, lead market makers, broker-dealers, different types of trading desks, exchanges, venues and clearing agents.
Market makers (MMs) are liquidity providers of exchange traded funds (ETFs) on regulated exchanges and other trading venues, such as multilateral trading facilities (MTFs). The vast majority of market makers operate both in the secondary market and primary market for creations and redemptions of SPDR ETFs.
Authorised participants (APs) are the only counterparties allowed to enter creation and redemption orders directly with a fund. The ability of APs to create and redeem an ETF’s shares helps balance supply and demand for the ETF shares in the secondary market, which helps keep the price of the ETF shares tied to their intrinsic value.¹
ETFs benefit from a unique process called creation and redemption. In essence:
This process sets ETFs apart from other investment vehicles and is the mechanism that underpins many of their benefits, from improved tax efficiency to enhanced liquidity. But there is a lot more to it.
Need Help with a Trade? Access our Capital Markets Expertise
State Street Global Advisors offers a dedicated ETF Capital Markets Team to assist with connecting institutional investors to authorised participants, market makers and other liquidity providers. The team can help with pre-trade analysis, finding pockets of liquidity and ensuring the tightest available spreads.