Trading costs for NYSE-listed stocks again lowest in world

By: Ray Pellecchia

File Under: NYSE

• 2 Comments
• Email Entry

TRADING - Addition by Subtraction (InstitutionalInvestor.com) -- This is Institutional Investor magazine's annual article surveying trading costs by market, as measured by research firm Elkins/McSherry.

For the second year in a row, it finds that trading NYSE-listed issues costs less than trading those of any other market in the world. Here's the link to my post about last year's survey.

Excerpt from this year's piece:

"NYSE shares have long had among the world's lowest transaction costs, but they have gained ground rapidly. As recently as 2003 the NYSE was in seventh place...; two years ago our survey showed the cost of trading Big Board-listed shares as the third-lowest in the world, behind Japan and Germany."

The article theorizes that costs of trading NYSE-listed issues has fallen because of this year's larger percentage of NYSE-listed shares trading on competing markets. I don't agree; if that were the case, what would explain last year's rise to first place in the ranks from third place the year before? I do agree with the article's premise that greater competition is leading to lower costs, but that's hardly new. The article doesn't mention how NYSE's declining spreads might have contributed, though I'm certain they were measured as part of the survey.

In any case, I'll take it. According to the article, during the 12 months ended June 30, the average institutional trade of an NYSE-listed listed stock cost 14.80 basis points compared with 17.51 the year before. In contrast, the cost of trading a Nasdaq-listed issue was 19.44 basis points in the most recent period, a much more modest improvement from last year's 20.66. Nasdaq stocks remained a distant third to NYSE and Tokyo stocks in these rankings.

Also noteworthy: the survey finds trading costs declining in the other countries in which NYSE Euronext operates equities markets: Belgium, France, the Netherlands and Portugal.

Hope you had a wonderful Thanksgiving. A little historical trivia from the last couple of days, to get you back in the swing:

Today in NYSE History

23 Nov. 1954 -- The Dow Jones Industrial Average closed above its 1929 peak for the first time (381.17).

25 Nov. 1865 -- Rules were established for trading in the "Long Room," the NYSE's first experiment in continuous trading.