Authorized Participant Definition
Learn the definition of authorized participant and other ETF terminology from the etf.com glossary.
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An authorized participant (AP) is a financial institution, often a large bank or investment firm, that has been designated by an ETF issuer to create and redeem ETF shares. APs play a crucial role in ensuring the smooth operation of the ETF market by providing liquidity and maintaining a balance between supply and demand for ETF shares. APs are regulated by the Securities and Exchange Commission (SEC) and must meet certain financial and operational requirements. They are also subject to strict oversight from the ETF issuer to ensure that they are operating in the best interests of investors.
Related Terms
Creation and Redemption Mechanism, Custom Basket, ETF Issuer, Liquidity
