creation unit

Creation Unit

The set of securities underlying an exchange-traded fund. A creation unit is a basket of securities traded on a particular exchange that are assembled and repackaged as a single share of the exchange-traded fund.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

creation unit

The minimum number of shares of an exchange-traded fund, usually between 25,000 to 300,000, that will be delivered to authorized participants in exchange for the predefined basket of securities underlying the fund's securities. Creations and redemptions occur at end-of-day net asset values.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Creation unit.

A creation unit is a basket of securities that corresponds to a specific number of shares in an exchange traded fund (ETF). The securities in the creation unit are those that are included in the ETF's underlying index.

An authorized participant in an ETF -- typically an institutional investor -- assembles the relevant basket of securities and transfers that creation unit to the ETF sponsor in exchange for fund shares, which can then be sold to other investors.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
for an AP to profit by tendering creation unit bundles of shares in
An opportunity creation unit empowered to help developing countries prepare concrete and bankable investment projects including through pre-feasibility and feasibility studies, investment insurance, public-private partnerships, risk mitigation.
With the launch of our creative and content creation unit, it allows us to focus on the full spectrum of the content creation process to ensure success."
Garzon was previously senior director, oncology product creation unit at Eisai, and director, oncology global clinical research at Bristol-Myers Squibb.
Lynn Kramer, President, Eisai Neuroscience and General Medicine Product Creation Unit.
In doing so, the market maker is an authorized participant that pays a creation unit fee, which is listed in any ETF prospectus.
25 May 2011 - Japanese pharmaceutical company Eisai Co Ltd (TYO: 4523) said today that the partnership between its Neuroscience Product Creation Unit (Neuroscience PCU) and UK University College London (UCL) has entered a new phase by focusing on joint research in the neurodegenerative diseases including biomarker research, namely neuroinflammation, neurovascular/mitochondria, and proteostasis related research.
Instead, financial institutions purchase and redeem ETF shares directly from the ETF, but only in large blocks called 'creation units.' A financial institution that purchases a creation unit of ETF shares first deposits with the ETF a 'purchase basket' of certain securities and other assets identified by the ETF that day, and then receives the creation unit in return for those assets.
When redeeming a creation unit, an institutional or large investor receives a basket of the underlying securities and a small amount of cash, as determined by the PCF.
Michael O' Neal, president and chief executive officer at Gemini, will retain his leadership role and title, reporting to Philips' Business Consumer Electronics Creation Unit.
This is achieved through the arbitrage opportunity that is presented if the market value of a creation unit of ETF shares deviates from the value of the securities to he deposited for a purchase or to be distributed upon redemption.