Source: https://mochatrade.com/learn/glossary/etf-creation-and-redemption

# ETF creation and redemption
URL: https://mochatrade.com/learn/glossary/etf-creation-and-redemption
Last modified: 2026-10-17

ETF creation and redemption is how an ETF's price stays near the value of its holdings: large dealers swap baskets of shares for new ETF units, or units for shares, whenever the gap is worth it. [The dealers doing it are market makers](https://mochatrade.com/learn/us-market-structure/who-moves-us-stocks); a [perpetual uses funding for the same job](https://mochatrade.com/support/what-is-a-perpetual-contract-and-does-it-expire), and a copy with [nobody allowed to create or redeem has no anchor at all](https://mochatrade.com/blog/what-happens-when-the-only-thing).

## Related terms

- ADR (American Depositary Receipt): https://mochatrade.com/learn/glossary/adr
- Inverse ETF: https://mochatrade.com/learn/glossary/inverse-etf
- Pre-IPO stocks: https://mochatrade.com/learn/glossary/pre-ipo-stocks
- Stock split (US): https://mochatrade.com/learn/glossary/stock-split
- Contract rollover: https://mochatrade.com/learn/glossary/contract-rollover
- Real-world asset (RWA): https://mochatrade.com/learn/glossary/real-world-asset