[IBKR] Smart Routing & Comissions

[evangelism4everyone]

Hi, all

Recently moved to Interactive Brokers after Degiro increased their fees, trying to save some money but tbh wondering if IBKR isn’t more expensive really.

Two questions for any IBKR users, my only use-case is buy and hold ETFs, no trading:
- IBKR seems to default to Smart Routing when using the app/web version. When placing orders I find that fee estimations seem to be higher than my initial projections. I.e per the Tiered structure investing in EU exchanges if I’m investing 2k into VWCE I’d pay the minimum 1.25€ fee, but when placing an order I get an estimate between 1.5-2.15€
- Do you just use Smart Routing (and from your experience is it good) or do force the purchase through a specific exchange (e.g. XETRA) to try to get lower fees?

Thanks for the help.

 

[ron3865]

@evangelism4everyone I don't see smart routing as particularly useful for limit orders, so I usually force it through Xetra if it's a lean order or Gettex, which has no commissions.

For the core selection DeGiro is still cheaper, but in my opinion, less reliable.

 

[kaytiedid]

@ron3865 Why less reliable?

 

[natedogg777]

@kaytiedid Because they have been changing their commissions all the time. Also, they blocked us from accessing ETFs regarding the KIID situation. IBKR hasn't done so (yet). I got sick of Degiro tbh

 

[kaytiedid]

@evangelism4everyone You can’t beat the fees of the free selection in degiro I am afraid.

I just bought 1.5k worth of VWCE for 1€ total fees (it was 0 but now 1€ transaction fee since may 15th). This is still only 0.06% in fees.

 

[evangelism4everyone]

@kaytiedid Technically true, but you're forgetting about the 2.5€ per exchange connection Degiro charges anually.

If my calculations were correct, through IBKR Tiered for EUR ETFs you pay 0.050% fee with a min. of 1.25€ and a maximum of 29€ (depending on the invested amount). So in theory if I'm purchasing e.g. 1k/month of VWCE:

• Degiro 1€ p/ purchase p/ month + 2.5€/year exchange fee = 14.5€
• IBKR 1.25€ p/ purchase p/ month = 15€

In theory they're pretty much the same amount yearly, and this is why I decided to change since I trust IBKR a bit more as well, but the estimation fees in IBKR are confusing me.

Also granted, Degiro has a much simpler platform.

 

[theamazingatheist]

@evangelism4everyone They are pretty similar and both have pretty low fees, overall

 

[wrennelson143]

@theamazingatheist After 15 May, DeGiro got even more expensive.

 

[wrennelson143]

@evangelism4everyone After yet another price increase, after 15 May DeGiro got even more expensive.
The calculation of the cost with IBKR can get really tricky, especially for EU stocks. I feels that they deliberately made the cost structure over complicated.

The best place to buy EU stocks at the moment is Trading 212 - it basically uses the Smart Routing system or IBKR but it’s zero-commission.

 

[evangelism4everyone]

@wrennelson143

The best place to buy EU stocks at the moment is Trading 212 - it basically uses the Smart Routing system or IBKR but it’s zero-commission.

Yes and no. I use T212 for play money and some much lower monthly purchases but I’m not putting the bulk of my investments there for 2 main reasons:

1. They don’t seem as regulated as other options like Degiro or IBKR (and some banks as well) + they are an OTC exchange
2. The main reason is they currently don’t allow transfer of titles. If you have a big bag in T212 and want to transfer to another exchange you need to sell, realize gains, pay taxes and buy somewhere else. I want the option to transfer my investments to another exchange should I want to

I started investing through IBKR shortly after this post and am happy for now. I’ve been paying ~1.3€ (1.4$) per purchase which I think it’s pretty much the same I would pay in Degiro after the price increase.

 

[wrennelson143]

@evangelism4everyone Totally agree about 2., it’s the biggest drawback and they have promised to fix this in the future.

Don’t agree on 1. - they are FCA regulated- you can’t get better than that in 2023 - it’s the most respected finance regulator in my opinion.

I also use IBKR, but not for my main portfolio. IBKR gives you the biggest stock universe, so I buy some stocks there that are not available elsewhere. But after 12 months - I’m still not used to their UI, it’s horrendous and every time I feel like I’m traveling back to the 20th century. If that’s not a dealbreaker- IBKR is a safe choice.