Trade for free at Zecco?
I read about Zecco several days back on FWF. According to the original link, Zecco supposedly will allow customers to trade stocks for free, much like the predecessor of Izone, Freetrade.com. It sounds interesting but if trades are free, it makes one wonder about the viability of the business model.
Details of the trading plan at Zecco are not out on the website. But, let me start the ball rolling by listing the wish-list for features I would like to see:
- reasonable minimum investment (e.g. $1000 or $2000),
- supports margin account,
- supports ACH in and out with reasonable time schedule (no lengthly funds withholding time),
- trades settle on the normal day T+3 schedule,
- no ACAT (transfer out) fees,
- no inactivity fee,
- supports both market and limit orders,
- ability to change the limit order price with one step, instead of a cancel-and-resubmit,
- no separate per share trading fee (do not want for example $0.01 per share beyond 1000 shares), and
- supports tax-lot specification sales.
I guess if there are no ACAT fees and it supports limit orders, it does not harm much to try out Zecco when it debuts since you can always transfer out for free if you find that you don’t like them.
Additional note on tax-lot specification sales
Regarding the tax-lot specification, it is useful in the taxable account where an investor can specify, for example, to sell a specific “lot” of shares to minimize on taxes.
Fairmark has one very good section on specifying tax-lots. The link is
http://fairmark.com/capgain/ident.htm
The link covers a lot of detail but actually, there is very little additional work that a brokerage needs to do. The investor could for example send the following message to the broker:
“For my trade placed on 9/20/06 to sell 100 shares of QQQQ, please match it to my purchase made on 5/25/2006″.
The broker simply needs to quote the request and reply with
“Your request is acknowledged”.
Although the question of whether email acknowledgement is acceptable was raised at Fairmark, I think it is a reasonably small risk to take with email acknowledgements versus paying the tax based on un-optimized tax-lot sale.
An alternative method (like Brownco used to do) is to provide a space in the trading screen for investors to key in a custom tax-lot specification message which will be printed in the trade confirmation. No additional work is needed from the broker in this case.
By the way, Ameritrade Izone supports this email acknowledgement scheme, although they do put in a disclaimer that “Ameritrade Izone makes no determination or assertion regarding the legal sufficiency of the email acknowledgement under IRS regulations”.
Stumble it!
September 27th, 2006 at 10:23 am
Dear Indexfundfan,
Regarding your wishlist, prepare to be surprised.
1. Min. for opening an account is $2,500
2. Yes, margin accounts; Margin interest rates will vary with size of your portfolio but are right in line with other online brokers
3. Zecco Trading has ACH (we don’t hold the funds any longer than they take to clear) It’s always bothered us how long ACH takes when it should be instantaneous. We’re working on it. Yes, this is one of the ways that you can transfer funds to your account, as well as check or wire
4. Yes, Trades settle on a T-3 schedule
5. Transfer (ACAT) $75.00 fee per account
6. We have no inactivity fees.
7. Supports both market and limit orders; yes, Zero commission market, limit and ETF orders
8. Yes, one step limit order price.
9. There is one set price for stock trades regardless of number of shares: $0
10. You got me on the tax-lot specification sales.(I need more info from you)
Please come back to Zecco.com soon, on the new site, the price for everything which isn’t free is listed clearly, we are transparent. There is no “catch”. See you soon.
September 27th, 2006 at 6:36 pm
Hi Alfredo, thanks for replying. The features do look attractive.
I have revised the original post to expand on what I mean by tax-lot specification sales.
September 30th, 2006 at 4:25 am
Thanks for your Web-Site Indexfundfan. It makes me happy to see a web-site that is helpful. Vacman
October 12th, 2006 at 6:37 pm
A $75 ACAT fee? Isn’t that a bit steep to get your money out of Zecco?
I still don’t see where significant revenue is coming from…
-Grant
TheCornerOfficeBlog.com
October 13th, 2006 at 7:47 am
Grant, the ACAT fee was $75. Then in the afternoon Zecco went “live”, I noticed that it has dropped to $50.
$50 is the fee many brokerages charge to ACAT out. Brokerages that do not charge any fee now quite rare. I think Scottrade and Sogoinvest do not charge for ACAT out.
But you are right, having an ACAT fee is a deterent to many to open an account with a new broker.
October 19th, 2006 at 12:18 pm
I prob. wouldn’t try Zecco . There is to much negative about their site and Ach’s and also their wire transfers. They also give you a temporary account# so there is people trying to wire funds to a Temp.account and it won’t go through,then they get an E-mail with you new account#.I don’t like getting an account# by E-mail. Even Scott and Share don’t give out my Full account# over an E-mail system! Just my thoughts tho! I would for sure go with Sogo before Zecco. Maybe they will come around in time.VacMAN
October 20th, 2006 at 7:24 am
Vacman, please let us know your experience if you do open a Sogoinvest account. I have been quite happy with them now, after they fixed the issues I complained about.
October 21st, 2006 at 5:19 pm
Hi shlow,
Any idea international investors like us can take advantage of this?
regards,
Drizzt
October 21st, 2006 at 9:14 pm
Hi drizzt,
I am not aware if Zecco supports international investors. The clearing firm used by Zecco is a respectable one – Penson (which is also used by MB trading).
I haven’t opened an account there (yet) as the transfer out fee is one deterrent. Besides, I am still waiting for more user feedback and the bugs in their system to be ironed out before deciding. They did invite me to blog on their site but I really do not have the time to make original posts at two places at the same time.
BTW, Bank of America is also offering free trades if you have $25k deposits with them. The brokerage scene is really heating up here.
October 26th, 2006 at 6:17 pm
Indexfundfan, I went over to Zecco.com (Blog), you can tell that Zecco is having troubles.One guy says that $600.00 is missing from his account and he faxed them his account history and they said that our balance is right!.Looks like that guy’s trading cost is $600.00 so-far(,not really free,ha,ha) That could have been any of us because we all want to trade for free. WE GOT TO STOP AND THINK ABOUT, WHAT WE ARE DOING WITH OUR MONEY. STOP TRYING TO FIND THE CHEAPEST TRADES!!! JUST FIND A GOOD BROKER (with low trade cost)AND STICK TO A INVESTING PLAN!!!I hope they can get everything squared away. Their Ach system isn’t working just right. one person says it took 2 days, another person says I’ve been waiting 16 days for a wire to get transfered. yeeeeks!I think that Sogoinvest is really doing fine!!(ha,ha,)see ya later,Vacman
June 28th, 2007 at 1:25 pm
Zecco has changed a lot since you posted this. Zecco now offers IRA accounts, added complex options trading, and even dropped the minium balance to $0. It seems there is a heavy push to sign up as many customers as possible, perhaps in fear that other brokers will offer free traders to their customers as well. In the end, this results is inevitable because of increased competition for business and lower commission pricing as a result.
I think every investor/trader should at least visit the Zecco site, and complete the application. You can invest with as little as $1, and skip out on making the brokers rich off of commissions. It’s a win-win in my opinion. I recommend you read my zecco review, which outlines the entire signup process from start to finish. Good luck, and happy investing everyone.
August 8th, 2007 at 6:38 pm
Zecco will give/sell your email to spammers/3rd partied – Beware.
I have a Zecco account that I set up using a unique email address for zecco only. I gave it to no one else but zecco. Within 2 months I was getting about 12 spam emails a day for pump-and-dump stock scams. Zecoo is somehow giving out my email (I opted out to all marketing emails in the My Account section) or it is getting leaked unknown to them. Anyway, customer service has never replied to my complaints and any posts I add to their user forum get deleted by their admins. nice.
Other than that, the trading is free and I have no complaints there.
April 24th, 2008 at 9:22 pm
I have the same comment as Larry. I used a unique email address for zecco, and have received over 4800 emails from them in the past 5 months. And no, I do not trade that often.
Other than that I agree with Larry, the service is not bad.
BUT ZECCO: STOP SELLING MY EMAIL ADDRESS! Or tighten up your security. For your sake and mine, I hope you are selling the email address on purpose rather than having it leaking to spammers somehow.
April 25th, 2008 at 1:05 pm
Dear Zecco users, Zecco Trading customers,
Just to put this straight, Zecco does not, and never has sold any user/customer data to third parties.
Michiel de Boer
Zecco Community Director
July 15th, 2008 at 9:28 am
Dear Michiel de Boer,
If Zecco does not sell email addresses, please explain why I am receiving approximately 1000 spam email messages per day at an address I use ONLY for Zecco. I have never given that address to anyone other than Zecco. My other unique email addresses do not receive any spam. I use endjunk.com, which allows me to use unique email addresses on different websites and track which addresses receive the most mail, and my zecco email address is the only one of about 100 unique email addresses which is receiving spam. Clearly, either your email list has been compromised or you are selling email addresses. Please explain.
July 15th, 2008 at 9:37 am
Ben C, thanks for the tip on endjunk.com!
February 28th, 2009 at 7:31 pm
I researched Zecco as well and i put my money
it it to really check it out and decided it
was a bait and switch. It took over a month
before I could take my money out, so before
you decide to deposit money remember this
old saying (If It Sounds Too Good To Be True
-thats right) so I took a good advice and
signed up with scottrade.com and got 3 free
trades with this promo code: YWEU0574