An ETF summarizes the typical features of a fund and a share, enabling the investors to exploit the strength of both instruments:
An index is a barometer of the financial situation in a region, a country or a specific sector, and it includes the most representative and most actively traded shares in that particular market or sector.
You can buy ETFs through your bank or broker, which will put your order through to Borsa Italiana ETFplus market. The continuous trading of ETFs and structured ETFs takes place non-stop from 9.00 am to 5.25 pm. Following the migration to Millennium platform, a closing aucion phase from 5:25:00 pm to 5:30:00 plus a variable interval of up to one minute, determined automatically on a random basis by the trading system, has been introduced. Clearing of contracts is managed in Monte Titoli (the company for the centralized administration, clearing and settlement of the Borsa Italiana – London Stock Exchange Group) on the second open market day after the execution of contracts, whose final settlement is guaranteed by the Central Counterparty (Cassa di Compensazione e Garanzia).
The creation and redemption process requires the authorised participants to buy and sell the securities making up the benchmark index in order to create or redeem the ETF shares/units. Consequently there is a liquidity match between the ETF and the reference market, thus the spreads and the countervalue of the orders displayed on the trading book have the same conditions you might face buying or selling directly the index components.
However, in order to guarantee the maximum liquidity, it is required that for each ETFs a specialist displays on continuously basis bid and ask orders for a minimum quantity and a maximum spread as established by Borsa Italiana. Go to the specialist and liquidity provider section.
The dividends or interests that an ETF collects in relation to the shares/bonds included in its assets (as well as the proceeds from the re-investment of these) may be re-distributed periodically to the investors or permanently capitalized in the assets of the ETF. In both cases, the beneficiary is only the investor. Go to ETFs dividend section.
The ETFs listed on ETFplus are, depending on the instrument, Mutual Investment Funds or Sicav (UCITS). It is a known fact that UCITS have segregated assets with respect to those of the companies, which take care of their creation, management, administration and marketing activities. Therefore, ETFs are not subject to the insolvency risk in the event of default of the above-mentioned companies.
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