Edited sentence: On any standardized exchange two elements comprise almost all of the transaction cost – brokerage fees and bid-ask spreads.Since brokerage commissions do not vary with the time taken to complete a transaction, differences in bid-ask spread indicate differences in the liquidity cost.The bid-ask spread is an accepted measure of liquidity costs in exchange traded securities and commodities.The difference in price paid by an urgent buyer and received by an urgent seller is the liquidity cost.Under competitive conditions the bid-ask spread measures the cost of making transactions without delay