Trading ETPs is similar to trading shares but there are some important
differences.
Similarities: The basic process for buying and selling ETPs is the same as
trading shares. Orders (market, limit, etc.) are entered during exchange
trading hours via a normal brokerage account. Settlement of the trade takes
place two business days after the transaction (T+2). For a purchase, legal
ownership of the ETP is transferred to the investor and for a sale, funds
are deposited into their account.
Differences: Despite the similarities in the trading process, there are
some additional considerations when trading ETPs, such as the role of the
market maker and the best time during market hours to trade ETPs.
Leverage Shares ETPs are listed on the London Stock Exchange (LSE), Xetra,
Euronext Paris, Euronext Amsterdam and Borsa Italiana. Investors can buy or
sell ETPs electronically on these secondary markets through their broker,
with the same order types as shares, but not directly with Leverage Shares.
ETPs settle the same way as shares through the CREST settlement system.
Therefore, investors who can trade/settle shares on these exchanges can
also trade Leverage Shares ETPs in the same way. Leverage Shares ETPs track
some of the most liquid benchmarks, commodities, and stocks worldwide,
therefore there is substantial underlying liquidity in our ETPs.
Leverage Shares has market maker arrangements with BNP Paribas. A market
maker is a professional trader who is appointed by the exchange or the
product issuer to provide liquidity in the ETPs by providing quotes
throughout the trading day and updating their prices to reflect changes in
the underlying markets. Market makers also play an important role in
ensuring that buyers and sellers of ETPs can transact at prices close to
the net asset value (NAV) of the ETPs.
In practise, each day Leverage Shares publishes the list of ETPs,
enabling the market maker to calculate the NAV of the ETPs throughout
the trading day. This helps the market maker to more accurately price
the ETPs. They place a ‘spread’, around the NAV, resulting in a big and
offer price, at which to buy or sell the ETPs.
Order book liquidity is provided by the market maker (BNP Paribas) who
enters into agreements with the LSE, Xetra, Euronext Paris, Euronext
Amsterdam, Borsa Italiana, and Leverage Shares. This ensures that bid and
offer prices, are provided continuously throughout market hours. Thus,
investors can buy and sell Leverage Shares ETPs as they would normally
trade shares, using the usual equity order types such as ‘limit’, ‘market’,
‘stop loss’, etc. Its advisable investors use ‘limit’ orders and avoid
‘market’ ones. The minimum size to trade our ETP universe is 1 share.
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