CMFAS M8A Advanced ETFs question: Creation/redemption fees charged by an ETF

CMFAS M8AAdvanced ETFs

Creation/redemption fees charged by an ETF are borne by:

A Authorised participants dealing in the primary market, not secondary-market buyers
B Every retail investor, as a charge added to each trade on the exchange
C The index provider, as part of its licence agreement with the manager
D The fund itself, so all continuing unitholders share the cost equally

Show the answer and explanation

Answer: A. Authorised participants dealing in the primary market, not secondary-market buyers

Primary-market transaction/creation fees fall on the APs, protecting continuing shareholders from the costs of others' flows; ordinary investors instead face the exchange spread and commission when trading shares.

Common mistake

Creation/redemption fees hit APs (shielding existing holders from flow costs), not retail investors directly.

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CMFAS M8A Advanced ETFs question: Creation/redemption fees charged by an ETF

Answer: A. Authorised participants dealing in the primary market, not secondary-market buyers

Common mistake

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CMFAS M8A Advanced ETFs question: Creation/redemption fees charged by an ETF

Answer: A. Authorised participants dealing in the primary market, not secondary-market buyers

Common mistake

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