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Banking Essentials - Part I
This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.
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Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.
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Tackling the Cost of Living Crisis
In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.
CSR and Sustainability in Financial Services
In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.
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Mark Homans
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Categories
Discover our Courses
Featured Pathways
More pathways
Banking Essentials - Part I
This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.
Greenwashing
Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.
More pathways
Ready to get started?
Plans & Membership
Find the right plan for you
Our Platform
Expert led content
+1,000 expert presented, on-demand video modules
Learning analytics
Keep track of learning progress with our comprehensive data
Interactive learning
Engage with our video hotspots and knowledge check-ins
Testing & certification
Gain CPD / CPE credits and professional certification
Managed learning
Build, scale and manage your organisation’s learning
Integrations
Connect Finance Unlocked to your current platform
Featured Content
More featured content
Tackling the Cost of Living Crisis
In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.
CSR and Sustainability in Financial Services
In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.
More featured content
Ready to get started?
Our Solutions
About Us
Testimonials
More testimonials
Mark Homans
Our sky high NPS following learner feedback speaks for itself - this platform has delivered a lot of value.
Fiona Quinn
Learning is accessible and the tool assists in the continued development of all our employees. It is a fantastic tool for our business!
More testimonials
Ready to get started?
ETF Creation process
Gontran de Quillacq
25 years: Derivatives trading & ETFs
Market-makers are the only market participants authorised to create units with ETF fund managers, but they have to get the ETF shares from the fund manager. The way they do this is through a creation/redemption process. This video helps you understand the creation/redemption processes, along with their benefits and disadvantages.
Market-makers are the only market participants authorised to create units with ETF fund managers, but they have to get the ETF shares from the fund manager. The way they do this is through a creation/redemption process. This video helps you understand the creation/redemption processes, along with their benefits and disadvantages.
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ETF Creation process
12 mins 49 secs
Market-makers are the only market participants authorised to create units with ETF fund managers, but they have to get the ETF shares from the fund manager. The way they do this is through a creation/redemption process that involves the market-maker exchanging the equivalent ETF securities, rather than cash, to the fund manager in exchange for ETF shares.
Key learning objectives:
Understand the creation/redemption process
Understand the benefits and disadvantages of the creation/redemption process
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This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.
How does the creation/redemption process work?
During the day a market-maker (authorised participant) will sell ETF shares to investors, and buy the equivalent basket of securities from the market to hedge themselves. At the end of the day, they will have a residual position, they have shares, and require the ETF shares to deliver to the investors.
An ETF fund manager will then exchange that residual position of shares for the required number of ETF shares.
It is an ‘in-kind’ creation, meaning that the market-maker delivers the shares, not money.
What are the benefits of the creation/redemption process?
- No execution risk
- Can give the creation instruction after the market has closed
- Fund manager doesn’t have to hold cash to buy extra stocks
- In the redemption process, the sale (delivery) of the stock components from the ETF fund manager to the market-maker is not a taxable event
- It is virtually cost-free
What are the disadvantages of the creation/redemption process?
- As shares and ETFs are delivered in-kind (for free), with global ETFs you need to modify settlement systems to adjust for different currencies
- There are shorting restrictions on certain shares and currencies
- There are trading restrictions for certain market-makers
- There are FX hedging considerations required for global ETFs with multiple currencies
- There are issues calculating the value of global ETFs when half the market is closed and the other half is open
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This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.
Gontran de Quillacq
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