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section header ETF fundamentals

subsection header Trading

Key players

A number of players support the ETF ecosystem, some of whom participate in the primary market (where ETF units are created or redeemed), and those who participate in the secondary market where ETF units trade on an exchange.

 

Here are the key players in each market:

Primary market

  • ETF issuers are responsible for developing and managing the ETF and its portfolio of securities.
  • Authorized dealers are the institutions authorized to interact directly with an ETF issuer to create and redeem large blocks of ETF units. Many liquidity providers in the secondary market are also authorized dealers.

 

Secondary market

  • Market makers and other liquidity providers provide intraday liquidity for securities on the stock exchange. They compete for order flow by publishing quotes to buy (bid) and sell (ask) on an exchange. Every ETF has a designated broker (DB) who is responsible for maintaining a continuous two-way market during primary market hours.
  • Trading desks use their expertise to assist clients in executing complex or large ETF trades as efficiently as possible. They are often able to source additional liquidity in an ETF regardless of its average daily volume or the liquidity shown on the trading screen.
  • Investors buy and sell ETF units on an exchange at an agreed upon price.

Basics

Learn the basics of ETFs, including their history, how they compare to mutual funds, what types are available and more.

Management

Learn about the different types of exchange-traded products, how index and active ETFs are managed and more.

Strategies

Learn about strategic and tactical uses for ETFs, including asset and sub-asset allocation, portfolio completion, cash equitization and more.

Commissions, management fees, and expenses all may be associated with investment funds. Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; please read it before investing. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. Vanguard funds are managed by Vanguard Investments Canada Inc. and are available across Canada through registered dealers.

This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial and/or tax advisor for financial and/or tax information applicable to their specific situation.

All investment funds, including those that seek to track an index are subject to risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market. While the Vanguard ETFs are designed to be as diversified as the original indices they seek to track and can provide greater diversification than an individual investor may achieve independently, any given ETF may not be a diversified investment.

All monetary figures are expressed in Canadian dollars unless otherwise noted.