Exchange traded products

Who trades ETPs?

Typically only large institutional investors (‘authorised participants’) actually trade shares of an ETP directly with the fund manager. However, they then act as market makers, allowing individual investors to trade ETPs with them on the secondary market.

These authorised participants provide liquidity in the market and help ensure the close correlation between the intraday market price and the actual net asset value of the relevant underlying assets. Typically the deviation between the market price and the net asset value is less than 2%.

How to trade

ETPs are traded in the same way as shares. If you already trade stocks or other securities with a stockbroker or investment management company, you should also be able to trade ETPs. Typically ETPs can be traded over the phone or electronically, online.

Trade on margin

ETPs can be traded on margin, so you need only place a margin that is a fraction of the overall cost.

When trading on margin, it’s important to be aware that if the market moves against you it is possible to lose much more than your initial margin. Using leverage in this way gives you access to the full value of the underlying market, just as much when it moves for you as when it moves against you.

See our leverage module to find out more about margin trading.

Costs and pricing

As with other securities traded on exchange, generally there are commission costs associated with ETP trading.

The size of the spread depends on factors such as liquidity and volatility in the ETP itself and the assets being tracked.