IQ

Who keeps ETF prices tight: APs and market makers

A six-minute lesson on real ETF data, with a quiz.

Tap a firm to see its share of the dollars created and redeemed.$100,000,000Merrill Lynch $37,390,362Jane Street $35,569,394Goldman Sachs $21,071,418Virtu $5,968,825Of $100,000,000: Merrill Lynch $37,390,362, Jane Street $35,569,394, Goldman Sachs $21,071,418, Virtu $5,968,825.Hypothetical total. ISPY's shares of dollars created and redeemed, N-CEN year to May 31, 2026.Step 1: listed against active. ISPY's yearly SEC filing (Form N-CEN) for the year to May 31, 2026 lists 39 APs. Only 4 created or redeemed any shares.Step 2: how concentrated? Shares of the dollars created and redeemed:Merrill Lynch, Pierce, Fenner and Smith: 37.4%Jane Street Capital, LLC Capital: 35.6%Goldman Sachs: 21.1%Virtu Americas: 6.0%Step 3: who quotes it. On Nov 9, 2026, Cboe BZX listed Susquehanna Securities, LLC as ISPY's lead market maker. Susquehanna is not one of ISPY's four active APs: quoting and creating are separate jobs.Step 4: who filled retail orders. A one-way cost is what a trade pays beyond the midpoint, halfway between bid and ask; at the posted quote, that is half the spread. In September 2026, retail market orders in ISPY paid $2.32 one way on $10,000, against $7.41 at the quote, because wholesalers filled them inside it.Saving against the quote: $7.41 − $2.32 = $5.0995% of shares filled better than the quoteStep 5: the whole market. In the 3,954 ETFs whose filings ETFIQ read, 75 firms were named as APs and 51 created or redeemed shares (as of Sep 23, 2026). The exchanges name just 16 firms as lead market makers for 5,026 ETFs; Jane Street Capital, LLC leads the most, 1,020 (as of Nov 9, 2026).

Trading Products and Costs · Lesson 3 of 6123456

The question

When I trade an ETF, who is on the other side, and who keeps the price close to what the fund holds?

The idea

  • Three kinds of firm do three different jobs.Authorized participants (APs) deal with the fund itself. They hand over a basket of holdings for new shares, or return shares for the basket (Beginner lesson 1). This keeps the price near the NAV.The lead market maker (LMM) is the firm a stock exchange assigns to an ETF. It must keep a bid and an ask posted through the trading day, so there is always a quote.Wholesalers are trading firms that fill most orders placed through retail brokers, often at a better price than the posted quote.
  • One firm can do several jobs. What matters is how many firms do the work, not how many are listed.

Worked example

The 5 steps beside the drawing at the top work this through on ETFIQ data. Point at a step to light the part of the drawing it describes.

ISPY, the S&P 500 income fund from lesson 1. Each source has its own date.

The top two did 37.4% + 35.6% = 73.0%. ETFIQ flags "One dealer" when a single firm does more than 80%, or only one is active. ISPY is not flagged.

Compare TINY from Beginner lesson 4: 0 of 39 active in the same filing year, and its price often strayed past 1% from NAV.

The common mistake

"A fund with 39 APs has 39 firms keeping its price in line." The list is who signed, not who works. ISPY had 4 active; TINY had none. Read the active count and the largest share.

Check your understanding

Pick an answer to see why. Two of three right passes the lesson.

1. Which firm hands the fund a basket of holdings in exchange for new ETF shares?Answer: D. An authorized participant. only APs create and redeem with the fund. Not A: the lead market maker posts quotes on the exchange; it can also be an AP, but quoting is a different job.2. A fund lists 30 APs. In its filing year, one firm did 90% of its creations and redemptions. What does ETFIQ show?Answer: C. A "One dealer" flag. one firm above 80% triggers the flag, because the price leans on that firm staying active. Not A: the listed count is not the working count.3. Retail orders in a fund paid $3.10 on $10,000 one way, against $8.00 at the quote. How much better than the quote, in dollars?Answer: B. $4.90. $8.00 − $3.10 = $4.90 saved against the posted quote. Not D: adding the two counts the cost twice.

Takeaways

  • APs keep the price near NAV; the lead market maker keeps a quote posted; wholesalers fill most retail orders.
  • Count the active APs and the largest share, not the listed ones.
  • Any fund's Trading tab names its active APs and its lead market maker, with dates.

Do it on ETFIQ

See who makes the market in your fund

Cite this pageCitation, APA and Markdown

ETFIQ, Who keeps ETF prices tight: APs and market makers, data as of Nov 9, 2026. https://etfiq.com/academy/trading-products-and-costs/authorized-participants-and-market-makers/

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