Authorised Participants

Authorised participants
Source: Tavaga

Authorized participants or APs are large institutional players in the market that play a primary role in providing liquidity for secondary sales and in the creation/redemption of the ETF units.

Role of an AP in an ETF

When new ETF units are required to be created, an AP buys the shares that make up the underlying ETF basket and deposits them with the sponsor or the issuer of the ETF. In turn, the AP collects the ETF units. The sponsor can appoint more than one AP for an ETF. An AP has more authority and permission to deal with the actual underlying assets basket as compared to a Market Maker


The APs are generally big players like Goldman Sachs, Merrill Lynch, JP Morgan Chase, Morgan Stanley, etc. 

The APs are neither obliged to buy and deposit nor they get paid for it. They make money out of the block of shares that they get to resell at a profit, whereas the sponsor also gets an already created fund. More APs help to increase the liquidity, and a cut-to-cut competition between them helps to increase market efficiency.