I just saw this on GigaOM:Skype backer takes on ETrade with free trades
Morten Lund, the guy who was the earliest backers of Skype is at it again. He has financed Zecco, a start-up that will allow consumers to trade stocks for zero commissions, versus $10 to $20 that many online brokers charge today. Other investors in the company include former Dutch Coca Cola CEO Pier Baarsma and Soren Kenner former chairman of McCann Erickson MRM Europe
CEO Jeroen Veth, a 37 year old entrepreneur and former Merrill Lynch Vice President is heading up the company and contends that most of the old school online brokers spend too heavily on marketing and thus have to charge higher prices. Lund and crew believe that the actual trade costs about $2 and if they can lower the cost of marketing to near zero, they can offer zero commission trading. They will make money with what else - advertising.
"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"
Zecco, in company’s own words is at “the intersection where online brokerage meets Yahoo Finance and Myspace,” and offers tools such as free blogging, forums etc. The big question is can they make it happen? My gut says that there will be some who will be attracted to this service because of its free nature.
Others will show up at the service because of the forums, and the community, and many are already looking for options to Yahoo Forums. In the long run this could cause old school companies to look at their own pricing structures hard and lower their prices. But can Zecco be the next ETrade, well not sure about that. What do you think?Seems that the service is about 18 days away from going live. Zecco
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Its not 40 free trades anymore - its only 10 ($25,000 min balance)
Money Market Sweep Available (must send in form) for Cash Balances Option 1: CSAXX: Current Yield as of 9/26=1.88% Option 2: CHSXX: Current Yield as of 9/26=4.29%(tax exempt as well so effective yield should be higher) Option 3: ITRXX: Current Yield as of 9/26=0.43%(i believe it is tax exempt as well) Info on money market funds
5 day Hold is placed on Funds Transferred In greater than $10,000
Back-Up Site https://bd.zecco.com/TradingSignin.jsp
Message edited by: faw169 on 2009-04-09 13:28:33 CDT
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.
b0mbrman said:I'm gonna buy $1000 worth of the S&P 500...as each of the 500 individual stocks You jest, but that's what I'd love to be able to do -- and constantly sell whatever's down and hold whatever's up, to create a great big capital loss machine.
But I forsee this heading the same place as everyone who's tried it before. And remember, it's going to be some serious commissions to get rid of all those stocks with somebody else.
LH2004 said:b0mbrman said:I'm gonna buy $1000 worth of the S&P 500...as each of the 500 individual stocks You jest, but that's what I'd love to be able to do -- and constantly sell whatever's down and hold whatever's up, to create a great big capital loss machine.
But I forsee this heading the same place as everyone who's tried it before. And remember, it's going to be some serious commissions to get rid of all those stocks with somebody else.
Oh, I'd love to do it in all seriousness, as well.
Or, alternatively, own different market sectors (S&P 500, small cap, developed int'l, emerging markets, etc.) in ETFs and rebalance every week.
b0mbrman said:Or, alternatively, own different market sectors (S&P 500, small cap, developed int'l, emerging markets, etc.) in ETFs and rebalance every week.If you're dealing with baskets that large and trading that infrequently, you can afford to pay some more substantial commissions. Trading, say, 10 times a week, or about 500 a year, with a portfolio of, say, $200,000, MBTrading- or sogoinvest-level commissions would be pretty tolerable as a fraction of assets. I'd love to be trading individual stocks, maximizing security-specific volatility, trading maybe 1000 times a week, just for the sake of realizing losses for tax purposes; even $1 a trade would then be pretty outrageous.
This aught to be intresting. Free trades have been tried before. I wonder what makes them think it will work or do they even care. From what I understand they already have a website and are just adding the feature that will allow trades.
Also if they are going to pay the bills with advertising then the customer has to pay by being bombarded with pop-ups and flash ads while they are trying to decide on which stock to pick. I will keep and open mind though.
Maybe this is just designed to get a lot of us to check out their website. A short period of free trades to build the community. Then, over time the free trades go away, but still some people stick around for their forums and other services which they have found useful. Not a bad ploy if you ask me. And they still have all of your information for marketing purposes long after free trades are a vague memory.
Reminds me of freetrad.com from Ameritrade. I need to hear a more compelling reason than just free trades to get me over there. Super low margin rates, high credit interest rates, something...
Sounds right on the money Russler. I think I am going to go with sogo. At least I know the CEO William Yeh knows what he is talking about. I just checked him out and he has a huge background with the market. He already has a company that handles high volume trades for huge companies called genesis securities. He created sogoinvest to offer these same discount cost per trade prices to the individual investor. Who is creating zecco? and what is their purpose? That is what i want to know.
TTrader said:Sounds right on the money Russler. I think I am going to go with sogo. At least I know the CEO William Yeh knows what he is talking about. I just checked him out and he has a huge background with the market. He already has a company that handles high volume trades for huge companies called genesis securities. He created sogoinvest to offer these same discount cost per trade prices to the individual investor. Who is creating zecco? and what is their purpose? That is what i want to know.
Morten Lund, the guy who was the earliest backers of Skype is at it again. He has financed Zecco.... Other investors in the company include former Dutch Coca Cola CEO Pier Baarsma and Soren Kenner former chairman of McCann Erickson MRM Europe
CEO Jeroen Veth, a 37 year old entrepreneur and former Merrill Lynch Vice President is heading up the company....
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. 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.
