ETFs
COUNTERPARTIES
NYSE
XFT
AP
REDEMPTION
1 AP buys ETF shares from market 2 AP delivers ETF shares to BlackRock 3 AP receives ETF underlying securities 4 AP sells ETF underlying securities
CREATION
1 AP buys creation basket of ETF underlying securities 2 AP delivers creation basket of securities to ETF 3 AP receives new ETF shares 4 AP sells shares in market
REDEEM AP buys ETF shares → delivers to issuer → receives underlying → sells underlying
CREATE AP buys basket → delivers basket → receives ETF shares → sells shares
discount = buy+redeem = buy+swap
DISCOUNT 1 Buy NYSE share $9.80, NAV $10 2 Deliver share to XFT 3 Receive 10 BTCX tokens 4 Swap 10 BTCX for 10 USDC 5 Redeem 10 USDC
DISCOUNT 1 Buy NYSE share $9.80, NAV $10 2 Deliver share to XFT 3 Receive 10 BTCX tokens 4 Swap 10 BTCX for 10 USDC 5 Swap 10 USDC for bitcoin
discount = buy+redeem = buy+swap
Creation and redemption



RESOURCES
https://www.blackrock.com/au/insights/ishares/authorised-participants-and-market-makers
https://www.schwabassetmanagement.com/content/understanding-etf-creation-and-redemption-mechanism
https://www.ssga.com/us/en/intermediary/insights/master-the-mechanics-of-etf-trading
https://www.congress.gov/crs_external_products/R/HTML/R45318.web.html
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