QOTW (Oct 25th 2016): Are there cost differences when trading ETFs in Europe versus the United States?

Are there cost differences when trading ETFs in Europe versus the United States?

Chart 1: Weighted Average Peer Cost for ETFs in Europe and the US

Chart 2: Peer Cost Distributions for ETFs in Europe and the US

  • ITG’s Simon Barriball outlined the differences in the way European ETFs trade when compared to ETFs in the US. While the majority of trading in US ETFs is traded on-exchange, European traders are faced with the challenge of a highly fragmented liquidity pool. (Link to full article here). Using ITG’s Peer Group Universe, we took a look at ETF trading costs in Europe versus the US.
  • Chart 1 shows dollar weighted average implementation costs since 2014 for ETFs in Europe and the US. While ETFs in the US were generally cheaper to trade in 2014 and the beginning of 2015, we’ve seen lower costs in Europe over the past 4 quarters.
  • Chart 2 shows IS cost distributions from the 10th to 90th percentiles. The realized cost of trading an ETF in Europe follows a significantly wider outcome distribution than in the US where the range of costs is much tighter. 


Transaction cost distributions are based on the ITG Peer Group Database, which contains order-level information from approximately 180 buy-side institutions. Implementation shortfall costs are measured relative to the release to the desk and are expressed in basis points. Q2 2016 ITG Peer Group Database statistics are based on preliminary data as of 9/29/2016.


Refer to Equity Related Analytics for information on available Equity Related Analytics.

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