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Exchange-traded product

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This is an old revision of this page, as edited by Listed investments (talk | contribs) at 08:40, 31 December 2019 (ETCs are not a sub-category of ETNs but a different kind of investment vehicle (asset-backed securities and not unsecured debt obligations). ETC - Exchange Traded Certificated is not common. Certificates or Actively Managed Certificates are common in some European juristictions as derivative securities, but the few that are listed and thus Exchange Traded are issued under a listing prospectus for Exchange Traded Instruments. That got clarified in the changes I did.). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

An exchange-traded product (ETP) is a regularly priced security which trades during the day on a national stock exchange. ETPs may embed derivatives but it is not a requirement that they do so and the investment memorandum (or offering documents) should be read with care to ensure that the pricing methodology and use (or not) of derivatives is explicitly stated.[1] Typically, individual underlying securities, such as stocks and bonds, are not considered ETPs.

ETPs are often benchmarked to indices, stocks, commodities, or may be actively managed.[2] There are several different types of ETPs, including:

  • Closed-end funds (CEFs) CEFs are collective investment vehicles which restrict the investors right to redeem their units at NAV
  • Exchange-traded derivative contracts
  • Exchange-traded funds (ETFs) ETFs are mutual funds trading at a stock exchange having agreements in place to ensure that the stock exchange price always is close to the NAV
  • Exchange-traded notes (ETNs) ETNs are unsecured derivative debt obligations issued by banks or investment firms with a repayment value linked to an index or basket of assets
  • Exchange-traded commodities (ETCs) ETCs are asset-backed securities repackaging the value of commodities or currencies and listed at a stock exchange. ETCs are known in the European market where - other than in the USA - mutual funds cannot invest in single commodities or undiversified baskets of commodities. The distribution and marketing of ETCs thus is not regulated by mutual fund laws but by the Prospectus Directive.
  • Exchange-traded instruments (ETIs) ETIs are derivative securities repackaging the value of an index or even actively managed portfolio issued by financial institutions and listed at a stock exchange. ETIs are known in the European market where several investment strategies cannot be replicated within a mutual fund and ETIs are set up as an alternative investment vehicle to overcome these restrictions. The distribution and marketing of ETCs thus is not regulated by mutual fund laws but by the Prospectus Directive. These investment vehicles sometimes are also marketed as Exchange-traded certificates or (if unlisted) actively managed certificates (AMC)

ETPs also qualify for advanced types of orders such as limit orders and stop orders. This is in contrast to traditional mutual funds which are only available for buying and selling at certain points in the day.

See also

References

  1. ^ Example of a Fixed Income Exchange Traded Product
  2. ^ "Exchange Traded Products - Education". Archived from the original on August 13, 2010.
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