A distributor of the ETF and an AP sign an agreement that „authorizes“ the PA to create and trade shares with a particular ETF. Etf units are available for production and withdrawal in certain amounts, which constitute what is called a creation unit. A typical production unit is 50,000 etf shares; With a share price of $25, the ETF`s shares are worth $1.25 million. Any full-service NSCC member who has entered into an agreement with an ETF agent and distributor/sponsor to become an Authorized Participant may use NSCC`s ETF processing service. Traditionally, authorized participants are large banks like Bank of America (BAC), JPMorgan Chase (JPM), Goldman Sachs (GS) and Morgan Stanley (MS). They do not receive compensation from a sponsor and are not legally required to repay or establish the shares of the ETF. Instead, authorized participants are compensated by activities on the secondary market. The main advantage of authorized participants for investors is that they keep ETF prices close to the net asset values of the underlying securities. Without authorized operators, ETFs would instead become closed-end funds. In this situation, ETF prices could derive largely from net asset values, especially in the event of large upward or downward movements. There are many examples of closed-end funds whose value is significantly higher or lower than the value of their assets.
On the other hand, ETFs generally remain very close to their net inventory values. This Authorized Participant Agreement (the „Agreement“) is entered into by and between Capital Investment Group, Inc. (the „Distribution Partner“) and _____ (the „Participant“) and is subject to acceptance by Nottingham Shareholder Services; LLC (the „Transfer Agent“) and is also subject to the recognition and approval of the Dynamic Shares Trust (trust), a serial trust offering a number of portfolios for which the distributor is the distributor of these series (a „Fund“ and, together, the „Funds“) set forth in Appendix A, solely with respect to Sections 4(d) and 12(c). The capitalized terms used herein but not defined are defined in the current prospectus for each fund, as it may be supplemented or amended from time to time, and included in the trust registration statement on Form S-1 as amended from time to time or otherwise at the U.S. Securities and Exchange Commission („SEC“) can be submitted (the current prospectus of each fund together, togeth Several authorized participants help improve the liquidity of a particular ETF. Competition tends to keep fund trading close to its fair value. Most importantly, additional authorized participants encourage a market that works better. If one party ceases to act as an authorized participant, others will view the ETF as a profitable opportunity to create or trade shares. At the same time, the authorised participant concerned has the opportunity to tackle internal problems and take over primary market activities.
Participants (APs) are the intermediaries in the process of creating and withdrawing the ETF from the capital market. This process is a key feature that distinguishes ETFs from their investment fund counterparts….