Even when the size of investment is large, creating and redeeming ETFs is not allowed for individual investors in general. Therefore, individual investors can not participate in the primary market and can trade only in the secondary market. Like an individual stock traded in the secondary market, prices are determined by competition by respective ask and bid prices.
Unlike stock, the minimum quotation price unit for ETFs is equally KRW 5. Even if the price is less than KRW 50,000, the minimum quotation quantity unit is 1 unit. As the highest price of an ETF share is less than KRW 50,000 except for bond ETFs, you can have the merit of investing in ETFs even with a small amount of investment money of KRW 100,000 or less.
If the spread is expanded because the transactions of a specific ETF transaction are not vitalized, liquidity providers (LPs) must submit liquidity providing quotations to provide trading convenience to investors.
The allowable maximum quoted spread is 1%. If it is more than 1%, LPs have to submit providing quotations to reduce the spread in the market.