What stock exchange do you use ?

J

Julien

New member
Hi everybody,
I was wondering which stock exchanges you were using for ETFs and why?
I understand that it is best to choose the ones with the lowest bid-ask spread and the highest exchange volume. But how? Do some of you have hints to compare bid-ask spreads and daily volumes of specific ETFs over several exchanges ?

It may be quite straightforward for US ETFs in their home exchanges but as we have so many exchanges in Europe listing the same IE ETFs I wonder what are the bests and how to identify them ?

Also the fees of the different exchanges do not appear to be transparent at all.. any hints are welcome :)
 
For instance my Swiss broker offers me the embarrassing choice of the following options for some IE based ETFs :

Boerse Berlin

Boerse Stuttgart

Düsseldorf

ELECTR FUNDS

EPA Enext Paris

Euronext Amst.

Frankfurt

Gettex

Irish SE

LSE SETS

Muenchen SE

NASDAQ OMX

OTN (does that mean “over the counter” ?)

STU Fv TP2

SWX

Xetra ETF

"Best Execution"
 
Hi Julien

This is an excellent question and, indeed, a confusing one.

I have a few rules of thumb.
  1. I would only recommend using one of the biggest stock exchanges when possible. This would exclude things like STU, OTN, ELECTR, ... Anything you have never heard of should be avoided.
  2. I would only recommend the regional stock exchange. For instance, for an IE ETF, I would avoid NASDAQ and SWX
  3. I prefer buying each ETF in the currency it holds. So, if the holding currency is USD, I would buy the ETF in USD. Sometimes, you can do differently to avoid currency fees.

After that, the stock exchanges make little difference.
  • Usually, you can prefer a stock with high volume because it generally reduces the spread, and so improves your price.
  • In some cases, you may want to use the stock exchange with the best fees, which may vary depending on your broker.
 
Hi there,

What would you guys think about using a “Best Execution” order letting the broker choosing the best stock to exchange option?

Also is it right that the SIX / SWX applies a trading tax (taxe de bourse) in addition to the federal stamp tax (droit de timbre federal) on all trades ? This would definitely make SIX / SWX a bad option for foreign ETFs even if it is just 0.02%

I well understand the point of buying each ETF in the currency it holds if you have a fair FOREX broker like IBKR but with a Swiss broker like a Cantonal Bank wouldn’t the FOREX rates of stock exchanges be better?
 
Julien said:
What would you guys think about using a “Best Execution” order letting the broker choosing the best stock to exchange option?
Click to expand...
Which broker offers that? Normally, you have to select a position (meaning a ticket and a stock exchange) before submitting an order. I don't know any broker that would select the stock exchange itself.

Julien said:
Also is it right that the SIX / SWX applies a trading tax (taxe de bourse) in addition to the federal stamp tax (droit de timbre federal) on all trades
Click to expand...
I am not sure what you mean, but normally the price for all shares on a given stock exchange is the same.
Julien said:
I well understand the point of buying each ETF in the currency it holds if you have a fair FOREX broker like IBKR but with a Swiss broker like a Cantonal Bank wouldn’t the FOREX rates of stock exchanges be better?
Click to expand...
It would be better for fees. And in general, if these fees are high enough, it may be worth it. But you may introduce a significant spread that will sometimes be higher than what you save on fees.

In this case, if your broker is too expensive to trade on other stock exchange, my recommendation is to change broker :)
 
Baptiste Wicht said:
Which broker offers that? Normally, you have to select a position (meaning a ticket and a stock exchange) before submitting an order. I don't know any broker that would select the stock exchange itself.
Click to expand...
Many Swiss traditional banks are offering that according to the “LSfin” Swiss law, they also explain that in their “Best Execution” policies. Just google “Best Execution LSFin” and you will find plenty examples.
Baptiste Wicht said:
I am not sure what you mean, but normally the price for all shares on a given stock exchange is the same.
Click to expand...
I mean that if you pass an order on SWX instead of XETRA for the same ETF on the same price you would be charged this 0.02% “taxe de bourse” on the Swiss exchange.
Baptiste Wicht said:
It would be better for fees.
Click to expand...
Which one be better you mean : stock exchange or traditional Swiss brokers / banks ?
For instance SWX is listing in CHF some USD ETF, and I would think that stock exchanges are not applying any currency conversion fees but I am not sure.
Baptiste Wicht said:
And in general, if these fees are high enough, it may be worth it. But you may introduce a significant spread that will sometimes be higher than what you save on fees.
Click to expand...
I don’t get your point about the spread here, why would it depend on who is making the currency conversion (the bank or the stock exchange) if the order is passed on the same stock exchange. Could you explain?
Baptiste Wicht said:
In this case, if your broker is too expensive to trade on other stock exchange, my recommendation is to change broker :)
Click to expand...
It is not particularly expensive to trade on other stock exchanges but currency conversion rates at the broker are not 0. Unfortunately I am not allowed change broker as my wife is employee at this one… at least I get preferential fees that are quite competitive :)

Many thanks!!
 
Julien said:
Many Swiss traditional banks are offering that according to the “LSfin” Swiss law, they also explain that in their “Best Execution” policies. Just google “Best Execution LSFin” and you will find plenty examples.
Click to expand...
Best Execution is not an order type, it's a policy. it simply means that the broker has to provide you the best execution possible on a given stock exchange. It does not mean the broker has to choose the stock exchange for you.

Normally, it's always up to the investor to choose the stock exchange. The job of the broker is then to match two orders (buy / sell) inside the exchange.

Julien said:
I don’t get your point about the spread here, why would it depend on who is making the currency conversion (the bank or the stock exchange) if the order is passed on the same stock exchange. Could you explain?
Click to expand...
What matters is the stock exchange. SWX is much smaller than XETRA for instance. As a result, the volumes are lower and, as a result the spread is higher. So, you will get a worse deal when buying and selling. It's not only about currency conversions.
 
Baptiste Wicht said:
Best Execution is not an order type, it's a policy. it simply means that the broker has to provide you the best execution possible on a given stock exchange. It does not mean the broker has to choose the stock exchange for you.

Normally, it's always up to the investor to choose the stock exchange. The job of the broker is then to match two orders (buy / sell) inside the exchange.
Click to expand...
Yeah right, I never meant that it was an order type but with some Swiss brokers you can select this “best execution” instead of one stock exchange and the broker will then choose the stock exchange or market maker according to their best execution policy. You could use it with any order type. But it seems that it is just a kind of protection against some abusive broker behaviors and not a guarantee of having the best available market price or lowest spread sought for you by the broker on several stock exchanges. Probably not worth trying but I was wondering if someone could explain me more about it..
 
Last edited:
Coming back to the subject: here is a method that I started using to choose quantitatively the best Stock Exchange for a given ticker.

1) Search on Yahoo Finance https://finance.yahoo.com/ your ticker which is often listed on several stock exchanges
Capture d’écran 2024-11-08 à 15.04.13.png
2) Compare the "Avg. Volume" of your ticker on each relevant stock exchanges

3) Choose the one with the highest volume, best in the same currency as the asset and at a renowned and low fees exchanges

4) Do that for all your Portfolio in order to choose the best stock exchange for each position :
Capture d’écran 2024-11-08 à 15.17.16.png
 
Last edited:
In reality, I find that once you've picked the currency you want to use (which is more important than the volume), there aren't a lot of serious options when it comes to the exchange, at brokers like IBKR and compared to the list which was posted above.
 
You must log in or register to reply here.
Back
Top