ETF arbitrage is the set of trades authorized participants and market makers use to keep an ETF's market price near the value of its basket. They typically create or redeem shares when the price moves outside the arbitrage band. It is not automatic; costs, hedges, and balance-sheet limits can leave premiums or discounts in place.
Covered in: Why ETF Liquidity Is Not the Same as AUM · How ETFs Actually Trade (book) · ETF Market Structure Explained (book)
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