Morley Conn

The custodian is responsible for the movement of funds in and out of the ETF.

And the custodian, because they have access to those positions in the ETF, will provide, and we'll talk a little bit more about this afterwards, will provide authorized participants, the market makers, with updated portfolio positions so that the market makers can properly calculate what the net asset value is and price properly the ETFs.

And then of course, as well, you've got the investment advisors, and then you have the investment dealers themselves who are going to be out there marketing the product to the investing public.

The market maker, who's also in Canada known as the authorized participant, in some markets in the world, guys, those can be separate, but the market maker will put bids and offers out in the marketplace on the ETFs.

So we'll be out there continuously buying and selling the various ETFs that are in the marketplace.

And in Canada, often the market maker and the authorized participants are the same entity, same institution.

And so the authorized participants,

They will do what's called the creation redemption process, which is a really important integral part of the ETF trading process.

That is what balances the arbitrage.

And we'll talk more.

Hopefully we'll get into a little bit more detail in and around that through this discussion.

To get into how ETFs are created and redeemed, let's talk a little bit first about the various liquidity channels in the marketplace.

There's secondary and then there's primary.

The first tier of trading and liquidity would be literally on the exchange board between buyers and sellers of the product.

That interaction can also be market makers trading.

the authorized participants with the public as well, but it's that sort of transacting.

The second secondary level of liquidity that you will see is authorized participants, dealers, trading partners,

their inventories with the public as well.

So that will add another tier.

The first tier being buyers and sellers meeting together on the board.