Authorized Participant Definition

Authorized Participant Definition

Learn the definition of authorized participant and other ETF terminology from the glossary.

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Edited by: Staff

Learn more about Authorized Participant

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

ETF Glossary is’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.