• What is the difference between the primary and the secondary market?

    The primary market is where the orders to create new shares or to redeem existing shares from the ETF are made. They are done directly with the fund manager through the Authorized Participants. The secondary market refers to the share purchase and sale transactions that are conducted in the stock market.

  • How do the creation/redemption processes work?

    Creation and redemption are processes to increase or decrease the number of shares issued by a specific ETF. This process requires that the Authorized Participant, in those cases in which an order is created, give the manager the assets needed to create the fund’s basket in exchange for a minimum lot of fund shares. In the case of a redemption order, the Authorized Participant offers a minimum lot of shares from the funds to the manager, in exchange for rescuing the fund’s basket. For example, when creating shares in an ETF whose basket only has 50 (fifty) shares, the Authorized Participant must deliver fifty (50) shares to the manager according to a predetermined amount that is equivalent to the total amount in cash (or according to the case in question) and they will receive a minimum lot of shares from the fund’s manager. To access the composition of the baskets applicable to creating and redeeming the minimum share lots for the fund. Transactions in the primary market are conducted exclusively through the Authorized Participants.

  • How is the liquidity of an iShares ETF calculated?

    iShares ETFs are open mutual funds that benefit from the Authorized Participant’s capacity to create new shares or redeem existing shares at any time, thus adjusting the market’s liquidity. Therefore, besides the volume of share participations in the secondary market, iShares ETFs have an additional level of liquidity that stems from the possibility to create new shares. This capacity to create depends on the volume of assets that make up the basket. This is the determining factor for the increased liquidity of iShares ETFs.

  • How are the shares traded if the volume of transactions in the stock market is less than the trade order I want to place?

    You will need to consult with an agent or broker who is also an Authorized Participant to assess the feasibility of trading in the primary market. The minimum share lot in the primary market is 100,000 (one hundred thousand) shares of iShares ETFs.