Exchange Traded Product Definition

An exchange-traded product, or ETP, is a security you buy and sell on a stock exchange that aims to mirror the value or performance of something else. That “something else” can be an index, a single asset like gold or Bitcoin, a basket of stocks, a currency, or a bond index. The share price moves throughout the trading day, just like a regular stock, and is tied to whatever the product tracks.

Key features

ETPs trade intraday through brokers, so you can place market or limit orders and see real-time prices. They are designed to follow an underlying benchmark, and their structure is built around that goal. In traditional markets, you find ETPs tracking equity and bond indices as well as commodities and currencies. In crypto markets, you also see ETPs that follow the price of a specific token.

Main types

Exchange-traded fund (ETF). A pooled fund that usually holds a portfolio meant to track an index. Shares trade on exchanges during market hours.

Exchange-traded note (ETN). A note issued by a bank. It promises a return linked to a benchmark, but it is unsecured debt, so investors also take on the issuer’s credit risk.

Exchange-traded commodity or cryptocurrency (ETC). A product set up to provide exposure to a commodity or a crypto asset. Depending on the market, ETCs can be structured like funds or notes.

ETPs in crypto

In crypto, an ETP gives price exposure to a digital asset through the traditional brokerage route. You trade it on an exchange without setting up a wallet or moving coins yourself. Many crypto ETPs aim to replicate an asset’s price using either a “physical” approach, where the issuer holds the underlying coins, or a “synthetic” approach, where a swap with a financial counterparty delivers the return. Physical approaches reduce counterparty risk, while synthetic approaches can help when direct holding is not practical.

How ETPs try to track

Tracking can be done by holding the underlying assets, by using derivatives such as swaps, or by a mix of both. Each method tries to keep performance close to the target benchmark, though the real-world result can differ slightly due to costs and frictions.

Why investors use them

ETPs offer a familiar way to reach markets that might be hard to access directly. With one ticker, you can diversify across many holdings, tap into commodities, or add crypto exposure alongside stocks and bonds in the same brokerage account.

Risks and trade-offs

Market risk still applies, since prices move with the underlying assets. Liquidity can vary by product, which affects trading costs. Fees and tracking differences can create small gaps between product returns and the benchmark. Structure also matters. ETNs add issuer credit risk because they are debt. Synthetic replication introduces counterparty and collateral considerations that investors should evaluate.

ETPs versus mutual funds

Both are pooled vehicles, but mutual funds transact at the end of the day at net asset value, while ETPs trade all day on exchanges. That difference changes how you place orders and manage entry and exit.

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