Ann: Proposal to Restructure to an Exchange Traded Managed Fund, page-13

I find it interesting as it appears the market maker/authorised participant process for ETFs is fundamentally different.

That is, the issuer/fund manager does not have to sell units to fulfil redemptions. That is, redemptions are not fulfilled through cash payouts.

Rather, the issuer/fund manager provides a basket of securities, proportionate to the ETF unit/s redeemed, to the market maker/authorised participant.

The same process applies for creations, whereby the market maker/authorised participant provides a basket of securities (not cash) in order to obtain the requisite ETF unit/s.

I guess it doesn't matter how redemptions are met, by cash or securities, both result in a loss of the underlying investments held within the trust. This can have a negative impact either way. However, in times of market stress it would make greater sense to settle in specie rather than cash to avoid a price collapse in the security.