SIE practice questionmediumETFs - Redemption
Which party is primarily involved when ETFs are created or redeemed in large blocks known as 'creation units'?
- ABroker-dealers only
- BRetail investors
- CSEC staff
- DAuthorized participants✓ Correct answer
Explanation
Why D — Authorized participants
Authorized participants (APs) create and redeem ETF shares in large blocks, facilitating ETF liquidity. Retail investors access ETFs via the secondary market, not direct creation/redemption. The SEC and broker-dealers aren't responsible for this process.
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