Authorized Participants (APs)

Authorised Participants (APs) are large institutional entities — typically banks, broker-dealers, or financial institutions — that are officially designated by an ETF provider to create and redeem ETF units directly with the fund house in large blocks called creation units, typically comprising 50,000 or more units. This creation and redemption mechanism is the cornerstone of the ETF structure and keeps ETF market prices closely aligned with the underlying net asset value (NAV). When an ETF trades at a premium to NAV, APs can create new units by delivering the underlying basket of securities to the fund and selling the ETF units in the secondary market, driving the price back to NAV. When it trades at a discount, APs buy ETF units in the market, redeem them for the underlying basket, and sell the securities. In India, SEBI designates specific market makers and large institutions as APs for domestic ETFs listed on NSE and BSE.