The range around an ETF's underlying value within which its market price can move before creating or redeeming shares becomes economical for an authorized participant. The width of the band reflects creation and redemption fees, the cost of trading the underlying securities, and hedging costs.
Covered in: How ETFs Actually Trade (book) · ETF Market Structure Explained (book)
Related terms
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This material is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security.
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