ETF Agent Definition

Learn the definition of etf agent and other ETF terminology from the etf.com glossary.

ETF
|
Reviewed by: etf.com Staff
,
Edited by: etf.com Staff

Learn more about ETF Agents

An ETF Agent, often embodied by authorized participants, assumes a pivotal role in the creation and redemption process of ETF shares. These financial entities facilitate the efficient functioning of ETFs by engaging in the creation/redemption mechanism, ensuring the alignment of the ETF's market price with its Net Asset Value (NAV). Acting as intermediaries, ETF agents contribute to market liquidity and the seamless trading of ETF shares, enhancing the overall investor experience. Their involvement in the primary market activities supports the ETF's price discovery process and reinforces the vital link between the ETF and the underlying securities it represents.

Related Terms

Authorized Participant (AP), Creation and Redemption Mechanism, Net Asset Value (NAV), Liquidity

ETF Glossary is etf.com’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.