Primary Market Definition
Learn the definition of primary market and other ETF terminology from the etf.com glossary.
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Learn more about Primary Market
The Primary Market in ETFs represents the foundational arena where the creation and redemption of ETF shares occur. Authorized Participants, typically institutional investors, engage directly with the ETF issuer to create or redeem shares. This process involves exchanging a basket of securities for ETF shares during creation or swapping ETF shares for the underlying securities during redemption. The primary market mechanism ensures the efficient functioning of the ETF ecosystem, aligning the market price with the Net Asset Value (NAV) and contributing to the fund's overall liquidity and stability.
