Zecco, Online Brokerage Service: A New Commission Free Trade Based Business Model

A stock brokerage is generally known as the firm or company that buys stocks for individual investors. Normally these brokerages charge fee's for their services, but just recently a new online brokerage service started making the rounds in the blogosphere. This service is called Zecco, and its plan is to offer commission free stock trades for its members.

Even if the cost of purchasing stock averaged out to be just one percent of your total purchases, over the years you would save thousands of dollars by using this commission free service. Stock trading without commissions also frees up a number of strategies that would not have been financially viable if commissions were paid (momentum trading is just one example of this).

Zecco.com plans to recover the service fee's lost by collecting money through advertising, as well as collecting interest on the margin fees for money borrowed. This business plan seems quite new, and only time will tell if it is concrete enough for the long term.

The first step to creating my Zecco account was putting some due diligence into researching what other customers think of the service. After reading a number of both positive, and negative reviews I decided that the service was legitimate and that I should take the dive into this trendy new service.

After creating a Zecco member account, the next step was to create an account with their brokerage. The Zecco website is set up in a manor that separates the stock trading community (ala Web 2.0) from the actual trading platform. When creating an account with the brokerage I had to fill out a number of standard forms. After completing the web based process, I was instructed to print out the forms, sign them, and then send them to the Zecco office.

I didn't want to wait for the mail to get to Zecco before I could start trading so I faxed them a copy of the documents as well, and because of this I was able to start trading the next day. After faxing the documents I made sure to send Zecco a copy in the mail as well, because their terms of service require that they have an original hardcopy of all documents (not faxed or scanned). I have also heard from other users that 1/3 of your account will become unavailable to you if they do not receive the hard copies.

After having faxed the documents into my account I transferred the $1,000 dollar account minimum into the brokerage account. It should be noted that this account minimum was a special promotion that is now over, current account minimums are $2,500. After you have funded the account with the account minimum you mustn't worry about maintaining a minimum balance, there are no fees.

After have done all of this you should be able to trade. In reality, I was not able to trade. When trying to make my first purchase, I received the message "only orders that liquidate positions can be made at this time". At this point I thought the service was having some sort of problem, so I quickly called the brokerage. This soon indicated the service's weakest point: customer service. I was able to leave my telephone number, and email address, and within a day the broker got back to me. Apparently there was no problem, but people had to call and confirm their account over the phone.

Other weak points include small bugs in with the browser. Sometimes when I am trying to login using Mozilla's Firefox browser, I receive php login errors despite having the correct information. This is a minor annoyance at times, but normally a quick reload fixes this problem. I have never had a problem with the trading platform, and all trades have been performed in the proper time frame.

I have been using the service now for 2 months, and like it a lot. I do not feel like I need to be pampered through the entire stock purchasing process as some brokerages do. After 2 months of successful service I have transferred my portfolio from Etrade to the Zecco.