I almost feel like it’s the dot-com era again. This time, a new website called Zecco.com is saying that it will offer free online stock trades starting on October 9th, and instead make its revenue from advertising. Possible? I guess we’ll see.
They’ve been telling me about their blogger revenue-sharing program recently, and I wasn’t sure if I should join since frankly I get a lot of similar emails about new financial sites. But it seems like these guys have some serious backing, so I’ll have to look more into it. Check out the press release. Some excerpts:
Our model is different. We run a lean operation, use the latest technology and rely entirely on word of mouth, guerilla marketing, viral campaigns and public relations to get the message out. As a result we can look at the $2 per trade as the cost of doing business ? and still turn a tidy profit.
This approach will force the major brokerages to respond quickly – but in a sense they are caught between a rock and a hard place. Take E*Trade as an example. They will be looking at an annual loss of several hundred million of they decide to do away with commissions. Not a pleasant thought for a publicly traded company.
Thanks to Buddino for the heads up on the free stock trades announcement.
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Interesting. If they were to go belly up, what would happen to cash and securities held in an account with them?
Wow! Now the only cost is the bid ask spread.
sounds great…the only thing that makes me wonder about the validity of the claim is…for a business to make money off of advertising, wouldn’t they spell check what they advertise? or – at least make sure that the words they use make sense? not that i’m the grammar king or nuthin’.
Remember when buy.com use to sell stuff at cost and then try to make money off advertising? Kinda reminds me of that. Ahhh, the good ol’ days.
This would be great for day traders. I wouldnt mind free trading in exchange for clicking on a few ads. I might throw in a small amount of fun money to try it out. How do you feel about Zecco?
For any trader this is obviously of interest. From a business point, why do companies always end up competing on prices. Running a lean operation is a concern.
There are many other aspects which traders are concerned about, including speed of service, functionality of the platform and the stability of it.
Their emails drove me mad. The whole free-trade thing seemed more like an afterthought, and their website reads like a big fat buzz word collector.
But eh, if their business model works and profit, more power to them. Gonna quote a comment from fatwallet:
“Sounds like they included all the right buzzwords – maybe I can buy into their IPO before anyone notices they aren’t making money . FWIW, there are plenty of ways to lose money to your broker besides the $10/trade commission. You can get “bad fills” (a little worse price than the real market price), and since this difference is often a proportional cost (ie fraction of the share price), it can be more important than the fixed cost commission when trading lots of shares.”
Hmm – what happened to those other free sites? If you had stock with them did they just convert to fee based trades or did they close down or get bought out?
Your post was a little confusing. You can read more of what was said here http://mortenlund.wordpress.com/zeccouk02
The post makes it seem like it’s going to cost 2 dollars to the trader.
Looking intresting, there has to be a limit on the amount of trades per month.
Jonathan,
When I go to that site, I get “zecco.com is for sale! Make an offer”
You sure that URL’s right?
One thing that people always mention when they talked about different brokerages is the spread difference spread between the bid/ask price a brokerage can offer. Is there a way to compare this aspect of trading for a new site like this in comparison to older brokerages?
Where are you? Posts seem to be a little light lately. Great blog and enjoy reading so keep it up.
Jonathan,
Can you provide some feedback on the I-bonds that you bought in October last year.I did the same and I would like to know your thoughts whether you will withdraw the amount and keep it invested.I recall it was bought towards the end of October because you would get interest for the whole month of october and also the fixed rate was going up in Nov.
It’s worse than the dot-com era…
They have the backing to last for awhile; but will eventually either start charging money or they will go under and you’ll be transfering your stock to another broker.
Wow, “viral campaigns”, what do they mean by that?
I’ve been getting email from them too, and I keep just pitching it into the “look at as time permits” folder. Which means I’ll never look at it. Maybe I should….
The way I read it, it seems like it will cost Zecco $2 a trade, which they will make up via advertising. I agree, there will probably be some sort of limit. Might as well sit back and enjoy the show!