Here is a link to an entertaining article from justetf:
I say entertaining because I am not sure it’s informative. I didn’t readi ti well though. Once I saw “High trading cost” I stopped reading.
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It’s actually interesting what they say about the larger hidden spread because of the middlemen. But I imagin IB would actually place the order direct and not through a market maker.
Higher trading costs
Dealing in US-domiciled ETFs often incurs high bid-offer spreads because the broker places your order with a market maker rather than directly with a US stock exchange. A market maker is a financial middleman that holds a large inventory of securities and saves a broker the trouble of establishing a direct relationship with an overseas market. The market maker takes their profit and covers their risk from the bid-offer spread (the difference between the buying and selling price of the security) which will usually be marked up in comparison to a trade on the exchange.
Some brokers do have established partners in the US who can place orders directly on the US exchanges. This is a cheaper arrangement but sadly rare as few brokers have this facility in place.
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