Exchange Traded Funds (ETFs) & Exchange Traded Commodities (ETCs) Trading Information
Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs) trade through and clear and settle through CHESS in the same way as any other share on ASX.
The only difference between ETFs / ETCs and other shares that trade on the ASX is that they involve the primary market; that is the ETF / ETC issuers themselves are responsible for ongoing unit creation and redemption. This operates in conjunction with a secondary market which is traded on the exchange. The ongoing primary market provides the means of increasing and decreasing the number of units on issue as appropriate to strike a balance between supply of and demand for units. The secondary market provides investors with the ability to buy and sell the ETF units already on issue.
The importance of this function is that it ensures that that there is close price correlation between the traded unit price on the secondary market (the exchange) and the net asset value (the value of the assets) of the units.