Choosing the right stock exchange is tricky for beginner ETF investors. Many find it confusing. We shed light on this. We'll teach you how to find the best exchange for the ETF you want to buy and for the broker you use.

What is a stock exchange

A stock exchange is where buyers and sellers trade stocks, ETFs, and other financial instruments. When you buy an ETF through a broker, the broker connects to the stock exchange behind the scenes and finds a seller who's willing to sell you the ETFs.

Popular exchanges include the New York Stock Exchange, Nasdaq, or the Shanghai Stock Exchange. But European investors are better off trading through European stock exchanges. These options are cheaper and have lower taxes. Examples are Euronext Amsterdam, Euronext Paris, or XETRA in Germany.

Why the stock exchange matters when investing in ETFs

Minimising fees is the main reason to pick the right stock exchange to buy and sell your ETFs. Most ETFs are available on several stock exchanges. But your broker charges a fee that varies by stock exchange. For example, Belgian brokers like Bolero or Keytrade will have lower fees when buying ETFs on one of the Euronext exchanges (Euronext Amsterdam, Euronext Paris, or Euronext Brussels), and higher fees for a German exchange like XETRA. Naturally, we want to pick the cheapest stock exchange. Similarly, the advantageous fee for ETFs in the DEGIRO core selection holds only for certain stock exchanges.

Another consideration is currency. For example, ETFs on the London Stock Exchange usually trade in British pounds. If you buy such an ETF and your broker account is in euros, the broker will convert the currency for you. They'll charge a fee for that. To avoid such fees, prefer to trade in euros (or the currency of your investment account).

Finally, liquidity and trading volume can play a role. If only a few people are buying and selling an ETF on a particular exchange, the spread between the buy and sale price will be higher. Also, you may have to wait longer to complete the trade. This is because there will be fewer people ready to buy or sell your share. But, if you invest in larger, well-known ETFs (which we recommend, as they are more diversified), this issue is mostly theoretical. It won't have a big impact in practice.

How to find the stock exchanges an ETF trades on

The easiest way is to use justETF. Search for the ETF, for instance using its ISIN code. Then in the tab "Stock exchange" you'll see all the exchanges the ETF trades on.

We did this for the iShares MSCI World ETF (IWDA) in the screenshots below. We can see that it trades on the Borsa Italiana, Euronext Amsterdam and XETRA in euro. It also trades on the London Stock Exchange in pounds. It even trades on the Bolsa Mexicana de Valores in pesos.

The iShares Core MSCI World ETF (IWDA) on justETF
The stock exchanges that IWDA trades on as seen on justETF

Finding the best exchange for your broker

So you know which exchanges your ETF trades on. Now you need to figure out the exchanges for which your broker offers the cheapest fees. For that, you need to dig into the pricing of your broker, which you will find on their website.

For instance, let's look at Keytrade's fee structure. We can see that if we want to buy €1,000 of an ETF that trades on both Euronext Amsterdam and XETRA, we should buy it on Euronext Amsterdam. Because we would pay a transaction fee of €14.95 instead of €24.95.

Keytrade's transaction fees for ETFs

In practice: the best exchange to buy the IWDA ETF on DEGIRO

Let's imagine we want to buy the iShares Core MSCI World ETF (ISIN IE00B4L5Y983, commonly known as its ticker IWDA) through DEGIRO. We saw above that it trades on quite a few exchanges. We prefer to trade in euro, so it would one of Borsa Italiana, or Euronext Amsterdam, or XETRA, etc... We also know that IWDA is in DEGIRO's core selection of ETFs. However, a glance at DEGIRO's website tells us that we must buy it on Euronext Amsterdam in order to get the cheaper transaction fee of the core selection.

IWDA on the DEGIRO core selection of ETFs

Summary

You should pick the right stock exchange for your ETF investments. This will help you avoid paying extra broker or currency fees. We hope our guide helped you on your way.

Questions you may have

Why can't I choose the stock exchange with Trade Republic?

Trade Republic's business model is based on payment for order flow. Essentially, they made a deal with one particular stock exchange, Lang und Schwarz, who they send all their orders. In return, it is assumed that Lang und Schwarz pays Trade Republic a commission.

How do you know which ETF to buy?

Good question! It's one of the hard parts of ETF investing. First, you must build the portfolio that's best for you and suited to your goals. Then you can find the right ETFs that will make up your portfolio.

What's the best broker in Belgium for ETFs?

Brokers vary in price, convenience, safety, handling of taxes, ease of use... So unfortunately the short answer is, it depends. However, our comparison of brokers will certainly help you decide.

What are the best ETFs?

Another great question, without a satisfying answer. We suggest you start with our list of best ETFs for Belgians.