Who are the players?


A number of institutions and individuals are critical to ensuring ETF trading efficiency. The following are among them:

Authorized participants

are firms that transact directly with an ETF sponsor, typically on an in-kind basis, to create and redeem ETF shares.

Market makers

operate in the secondary market, providing intraday liquidity for securities. Market makers compete for orders by publishing buy-and-sell quotes for a guaranteed number of shares.

Lead market makers

also operate in the secondary market and are assigned to products listed on an exchange. The lead market maker has certain quote, trading, and other service obligations set by the exchange and receives incentives for meeting those obligations.

Block-desk traders

help ensure that large-volume (generally a minimum of 10,000 shares) and large-value (generally a minimum of $200,000) trades are executed efficiently. When executing ETF block trades, they are able to find liquidity in an ETF regardless of its average daily volume or the liquidity that is shown on the trading screen.

All investing is subject to risk, including possible loss of principal.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

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