Investing in ETFs through a big bank discount brokerage is one of the cheapest ways to build a diversified portfolio – that is, until you factor in the cost of their trading commissions. If your accounts and monthly contributions are modest in size, you may want to consider going with Questrade instead, a discount brokerage that offers commission-free ETF purchases.


Taking the ECN way out

Although Questrade does not charge traditional trading commissions, they do charge something called electronic communication network fees, or “ECN fees”, on most trades that take liquidity away from the market. Examples of these types of trades include market orders or “marketable limit orders”, which is a limit order that is expected to be filled immediately (Marketable limit orders are the type of order that I recommend placing for all ETF trades). For purchases of Canadian-listed ETFs, the ECN fees charged are $0.0035 per share.

In the example from my tutorial, I place five ETF purchases at Questrade and rack up only 60 cents in ECN fees (compared to about $50 of trading commissions at the big bank discount brokerages for a similar portfolio). You can see why Questrade has become the choice for cost-conscious ETF investors.


Example:  ECN fees charged on a $5,000 ETF portfolio implementation

Exchange-Traded Fund # of Shares Purchased ECN Rate ECN Fees
Vanguard FTSE Canada All-Cap Index ETF (VCN) 32 $0.0035/share $0.1120
Vanguard U.S. Total Market Index ETF (VUN) 23 $0.0035/share $0.0805
iShares Core MSCI EAFE IMI Index ETF (XEF) 30 $0.0035/share $0.1050
iShares Core MSCI Emerging Markets IMI Index ETF (XEC) 8 $0.0035/share $0.0280
Vanguard Canadian Aggregate Bond Index ETF (VAB) 80 $0.0035/share $0.2800
Total $0.6055
Source: Questrade