Glossary
Glossary
Authorized Participant (AP)
Simple definition: A large financial institution (usually a broker-dealer or bank) that has a special agreement with an ETF provider to create and redeem ETF shares in big blocks (called creation units). They deliver a basket of securities and/or cash to create new ETF shares, and return ETF shares to receive the basket back. This mechanism helps keep the ETF’s market price close to its net asset value (NAV).
Further reading:
Canton Network
Simple definition: A public, permissioned blockchain network for regulated finance. It’s designed so banks, exchanges, and other financial institutions can tokenize assets, trade, and settle transactions with high privacy, interoperability, and regulatory compliance. Canton is built around smart contracts written in Daml.
Further reading:
Central Securities Depository (CSD)
Simple definition: A central securities depository is a financial institution that holds securities (like stocks and bonds) in electronic form and keeps the official records of who owns them. Instead of moving paper certificates, ownership changes are recorded as book entries in the CSD’s system. CSDs often also help with clearing and settlement of trades.
Further reading:
Corporate Actions
Simple definition: A corporate action is any official event started by a company that changes its securities or affects its shareholders/bondholders. Examples include dividends, stock splits, bonus shares, rights issues, mergers, and acquisitions.
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CIP-56 (Canton Network Token Standard)
Simple definition: CIP-56 (Canton Improvement Proposal 56) is the token standard for the Canton Network, similar to Ethereum’s ERC-20 but upgraded for regulated financial assets.
It defines common rules for how tokens on Canton are created, transferred, and managed using Daml smart contracts, including features like:
Permissioned / controlled transfers
Privacy-preserving balances and transaction visibility
Support for regulated assets (e.g. tokenized treasuries, stablecoins, RWAs)
Interoperability between wallets, custodians, and apps across Canton
Further reading:
“What is CIP-56? A Guide to Canton's Token Standard” – https://www.canton.network/blog/what-is-cip-56-a-guide-to-cantons-token-standard
Canton developer blog (mentions CIP-56) – https://www.canton.network/blog
Daml (Digital Asset Modeling Language)
Simple definition: Daml is an open-source smart contract language created by Digital Asset. It’s designed for building privacy-aware, multi-party financial applications that can run on blockchains or other ledgers (including the Canton Network).
Key points:
High-level language focused on workflows and rights/permissions
Built-in concepts for who can see and do what
Same Daml code can run on multiple supported backends (Canton, PostgreSQL, etc.)
Further reading:
Official docs: https://docs.digitalasset.com/overview/3.4/index.html
Exchange Traded Fund (ETF)
Simple definition: An exchange-traded fund (ETF) is an investment fund that trades on a stock exchange like a stock. An ETF holds a basket of assets (e.g. stocks, bonds, commodities), and its price moves throughout the trading day as investors buy and sell. ETFs are popular because they offer diversification, relatively low fees, and intraday liquidity.
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Portfolio Composition File (PCF)
Simple definition: A Portfolio Composition File (PCF) is a daily file published by an ETF issuer that shows the exact list of securities and cash used to create or redeem ETF shares (the creation/redemption basket).
It typically includes:
Each security in the basket
The quantity/weight of each security
Any cash component
Authorized Participants and market makers use the PCF to price, hedge, and trade the ETF, and to know what to deliver or receive when creating or redeeming ETF shares.
Further reading:
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