Create and Redeem ETFs
Create and Redeem ETFs
IBKR will facilitate the ETF creation and redemption process for you with ETF issuers.
ETF creation and redemption offers IBKR Pro clients the following benefits:
- Buy or sell a large quantity of ETF shares in one execution at the Net Asset Value (NAV)
- Create ETFs that are hard to borrow and lend them out via the Stock Yield Enhancement Program or use them to cover your short positions
Eligibility
All Interactive Brokers LLC institutional clients who clear trades on our platform are eligible to request ETF creation and redemption. Simply contact us to start the process.
How to Create and Redeem ETFs at IBKR
To create an ETF, you can do one of the following:
- Buy the underlying stock components of the ETF and contact IBKR to create the ETF from these components.
- Go short on all or some of the underlying components of the ETF if there is a sufficient equity in your account to support the resulting margin requirement, and IBKR will borrow the components for delivery.
To redeem an ETF:
- Buy the ETF and contact IBKR to redeem the ETF and receive the components.
During the creation process, IBKR must deliver the underlying stock components to the ETF issuer. If the account is currently holding the components, then IBKR will deliver them to the issuer. If the account does not currently hold the components, then IBKR will borrow them on the client's behalf. The redemption process works in reverse.
To initiate the process of ETF creation/redemption, please create a ticket. Requests for equity ETFs must be submitted to IBKR by 3:00 PM EST to accommodate ETF issuer deadlines of 4:00 PM EST. Certain ETFs have earlier deadlines. Cut-off times for fixed income ETFs vary.1
Note: Once you submit the ETF creation or redemption order, the transaction is irrevocable and you will be unable to cancel your request.
A selection of ETFs for which IBKR accepts orders is at the bottom of the page. IBKR may accept orders for ETFs which are not on the list and are issued by:
- Alpha Architect
- ARK Investment Management
- Blackrock Fund Advisors (iShares)
- Charles Schwab Investment Management
- ETF Managers Group
- ETF Series Solutions
- First Trust Portfolios
- Invesco Exchange-Traded Fund Trust
- PIMCO ETF Trust
- State Street Bank and Trust Company (SPDR)
Please contact your Sales representative or support for details.
Mechanics of ETF Creation and Redemption
The process of creating and redeeming ETFs at Interactive Brokers is simple and straightforward. The unit of ETF creation/redemption is set by the ETF issuer, with each unit containing anywhere from 10,000 to 100,000 shares of an ETF (see chart below). Creations and redemptions settle on a T+2 cycle basis.
Creation process for ETFs with in-kind settlement
Trade Date
- Submit a ticket to create a certain number of ETF units.
- You will receive a reply quoting the fees.
- IBKR will determine if your account will remain in margin compliance with the creation of the requested ETF.
- Once approved, IBKR initiates the creation order with the issuer.
- A buy order for the ETF and sell orders for the components will be processed in your account.2
- If the account is not already long a sufficient quantity of the ETF’s components per the resulting delivery obligation, a short position in the ETF components will appear. This can be avoided by buying the remaining quantity of components on the date of creation.
- The ETF creation trade and any resulting positions are reflected in the account.
Settlement Date
- IBKR delivers the ETF’s components to the ETF issuer.
- IBKR receives the ETF shares from the issuer.
Issuer
Sends ETF
Sends ETF Component
Shares Electronically
Electronically
Provides ETF
Requests an
ETF (x units)
IBKR clients is long components, buys the component(s),
or short position is created.
IBKR Cleared Institutional client
Issuer
ETF Sends
Component Shares
Sends ETF
Electronically Provides
Component Shares
Redemption Request
IBKR client is long the ETF, buys the ETF, or
a short position is created.
IBKR Cleared Institutional client
The redemption process is the opposite of the creation process.
Trade Date
- Submit a ticket to redeem a certain number of ETF units.
- You will receive a reply quoting the fees.
- IBKR will determine if your account will remain in margin compliance with the redemption of the requested ETF.
- IBKR will reject an ETF redemption order if it results in a short position for that ETF.
- Once approved, IBKR initiates the redemption order with the issuer.
- A sell order for the ETF and buy orders for the components will be processed.2
- The ETF redemption trade and any resulting positions are reflected in the account.
Settlement Date
- IBKR delivers the ETF shares to the issuer.
- IBKR receives the component shares from the ETF issuer.
Creation and redemption process for cash settled ETFs
- Submit a ticket to create or redeem a certain number of ETF units.
- You will receive a reply quoting the fees.
- IBKR will determine if your account will remain in margin compliance with the order of the requested ETF.
- IBKR will reject an ETF redemption order if it results in a short position for that ETF.
- Once approved, IBKR initiates the order with the issuer.
- A buy (create) or sell (redeem) order for the ETF will be processed.2
- The ETF trade, cash movement and any resulting position is reflected in the account.
Costs
- IBKR charges a flat commission of USD 500 for each creation and redemption.
- ETF issuers charge fees which Interactive Brokers will pass on to you.3
- Equity ETFs generally have a flat fee between USD 300 and USD 3,000 per unit.
- Fixed Income ETFs charge a percentage of NAV. This usually varies between 0% and 0.50% but can be higher. Some issuers charge an additional flat fee such as USD 500 per order.
- Each ETF’s Statement of Additional Information (SAI) will contain the charges.
- You may inquire about the exact cost by contacting support prior to submitting an order.
ETFs Available to Create and Redeem
Equity
| Symbol | Name | Shares per Unit |
|---|---|---|
| SPY | SPDR S&P 500 ETF Trust | 50,000 |
| DIA | SPDR Dow Jones Industrial Average | 50,000 |
| MDY | SPDR S&P MidCap 400 | 25,000 |
| XLY | Consumer Discretionary Select Sector SPDR | 50,000 |
| XLP | Consumer Staples Select Sector SPDR | 50,000 |
| XLE | Energy Select Sector SPDR | 50,000 |
| XLF | Financial Select Sector SPDR | 50,000 |
| XLV | Health Care Select Sector SPDR | 50,000 |
| XLI | Industrial Select Sector SPDR | 50,000 |
| XLB | Materials Select Sector SPDR | 50,000 |
| XLK | Technology Select Sector SPDR | 50,000 |
| XLU | Utilities Select Sector SPDR | 50,000 |
| QQQ | Invesco QQQ Trust Series 1 | 50,000 |
| IWM | iShares Russell 2000 | 50,000 |
| IBB | iShares Biotechnology | 50,000 |
| VTI | Vanguard Total Stock Market Index | 100,000 |
| VUG | Vanguard Growth Index | 25,000 |
| BOXX | Alpha Architect 1-3 Month Box | 10,000 |
| QMOM | Alpha Architect US Quantitative Momentum | 10,000 |
| QVAL | Alpha Architect US Quantitative Value | 10,000 |
| VMOT | Alpha Architect Value Momentum Trend | 10,000 |
Fixed Income
| Symbol | Name | Shares per Unit |
|---|---|---|
| BOND | PIMCO Total Return Active | 20,000 |
| CORP | PIMCO Investment Grade Corporate Bond Index | 50,000 |
| HYS | PIMCO 0-5 Year High Yield Corporate Bond Index | 50,000 |
| STPZ | PIMCO 1-5 Year U.S. TIPS Index | 50,000 |
| LTPZ | PIMCO 15+ Year U.S. TIPS Index | 50,000 |
| ZROZ | PIMCO 25+ Year Zero Coupon U.S. Treasury Index | 50,000 |
| TIPZ | PIMCO Broad U.S. TIPS Index | 50,000 |
| MINT | PIMCO Enhanced Short Maturity Active | 70,000 |
| LDUR | PIMCO Enhanced Low Duration Active | 20,000 |
| SMMU | PIMCO Short Term Municipal Bond Active | 20,000 |
| MUNI | PIMCO Intermediate Municipal Bond Active | 20,000 |
| PICB | Invesco International Corporate Bond | 50,000 |
| BKLN | Invesco Senior Loan | 100,000 |
| PVI | Invesco Floating Rate Municipal Income | 50,000 |
| PWZ | Invesco California AMT-Free Municipal Bond | 50,000 |
| PZA | Invesco National AMT-Free Municipal Bond | 50,000 |
| PZT | Invesco New York AMT-Free Municipal Bond | 50,000 |
Disclosures
- ETF creation and redemption is a manual process subject to IBKR and issuer policies and procedures. There is no guarantee that your order will be processed until it is confirmed by IBKR.
- On Trade Date, buy and sell orders are processed at the previous day’s closing price. The buy and sell orders will be restated to reflect the Trade Date’s NAV and basket prices after they are reported by the issuer and processed on the next trading day.
- ETF creation and redemption may be subject to variable fees which may differ based on the action taken.