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Quantitative Finance · Glossaire

Qu'est-ce que « Cash creation » ?

Definition 19.7 Markets III: Commodities, Energy and Crypto · Chapitre 19 — Dated Futures, Options and ETFs

Cash creation is the creation of an exchange-traded product’s shares against cash delivered by an authorised participant, with the fund buying the underlying asset itself; cash redemption is the reverse. They contrast with in-kind creation and redemption, in which the participant delivers or receives the asset.

Creation of shares in a spot bitcoin trust. In kind, the authorised participant delivers bitcoin, which goes to the custodian; in cash, it delivers dollars and the trust buys the bitcoin through an execution agent. Redemption reverses the arrows. Schematic.
Figure 19.3. Creation of shares in a spot bitcoin trust. In kind, the authorised participant delivers bitcoin, which goes to the custodian; in cash, it delivers dollars and the trust buys the bitcoin through an execution agent. Redemption reverses the arrows. Schematic.
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