Zecco will kill stock trade commissions

September 21, 2006 | Matt Marshall | Comments | |

zecco.jpgZecco.com, a Los Angeles company backed by early Skype investor, Morten Lund, says it is going to introduce “zero commission” trading Oct 9th, undercutting the entire industry of online traders, from E*Trade, Charles Schwab to Ameritrade.

The company’s Web site is blank right now, showing only a countdown to launch.

lund.jpgOutlandish, you say? Well, Lund (pictured here) funded Skype, the Internet telephone company which shook up the telecom industry, and he declares “there is absolutely no reason consumers should accept paying anywhere from $10 to $20 for a service that is easy to provide at no charge at all.” He says Zecco is his “biggest shot ever.”

Lund is not disclosing the amount he has invested. However Marcel Boekhoorn, a Dutch entreprenour, invested €4 million recently, the company said three weeks ago. Other investors include Dutch Coca-Cola chief Pier Baarsma, and Soren Kenner.

Lund said fierce competition among the major brokerages has led to massive customer acquisition costs, which prevent them from lowering costs further.

The actual cost of a trade is around $2, but the big guys are spending $500 or more per customer in marketing costs and are running their platforms on outmoded systems, Zecco.com founder and CEO Jeroen Veth said in a statement. Veth, 37 is a former Merrill Lynch Vice President.

Next Story: Start-up Zecco raises more than $4M to introduce “zero commission” trading
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Matt Marshall is editor and CEO of VentureBeat. Follow him on Twitter at @mmarshall, and follow VentureBeat on Twitter at @venturebeat.

  • Mr. Posey
    Your website link in the article is incorrect!!

    Zeeco.com is incorrect!
    Zecco.com is correct!

    Just a simple typo....
  • neke
    I have a background in the brokerage business. There is no doubt that competitive pressure will continue to drive down commissions and it will even go to zero at some point, but the impending ruin of Schwab, eTrade, Merrill and others won't happen. Schwab was never able to kill Merrill after all, even though from a pricing standpoint, they should have been dead long ago. It will take a long time for a critical mass of people with a high net worth to leave for something like Zecco. Doesn't mean there is no business here, but it will be for accounts with low balances, which when trading actively tend to go to zero rather quickly. And if you think they'll get all the twenty year olds who are price sensitive who eventually become the 50 years olds with money... once you have a family and some assets, you tend to look for solutions that encompass more than trading stocks (mutual funds...). When that happens, you don't care if you have to pay $10 for a trade.
  • Mr. Posey, nice catch. Has been corrected.
  • Niraj
    What is Zecco's business model?
  • steve
    Looking forward for the trend to continue but I certainly won't risk large amounts of money with the 1st guy. There is a certain amount of value in having a respected company holding my net worth.
  • you can actually view more of the site, if you view the source, you can get links places withing the site.

    http://www.zecco.com/markets/default.aspx
  • david
    emailing this function seems not to work.
  • Nice one Morten. He is a pioneer like no cowboy before him. But his instincts are pretty good. Track record speaks for itself. Although that may be more about his contacts.

    Best of luck.
  • Zecco - Is "Free" a Business Model?

    The hot startups today all seem to have one thing in common today - they all have "FREE" as a business model. That is why when I read about Zecco.com, the free online stock trading site backed by the funder of Skype, my eyes rolled over. Have I heard this story before or what? Once and for all entrepreneurs, I would like to address the question that is on every Web 2.0 entrepreneur's mind: Is "FREE" a business model?
  • Hi Matt,

    Neat story. If there isn't any major hidden catch, this may be quite interesting indeed. I will definitely pay attention to it when it launch.

    Cheers,
    Kempton
    --------
    P.S. My good friend Sean created this 2-minute video "The Elevator Pitch" for CBC's Dragons' Den. See if you agree with his view.
    http://www.youtube.com/watch?v=Tq0tan49rmc
  • Sogoinvest.com already offers $1 trading. I've always believed that it's possible to have zero-cost discount trading, but it needs to be subsidized by other revenues. The company could advertise or collect leads for big-ticket items like insurance policies, refinancing, airline tickets, etc., or just invest your cash. With certain firms, you can already trade for free if you have more than $1mm in assets. Think of the interest that they're making with the cash part of your holdings each day.
  • I'm giving Zecco a try!

    -Steven Burda
  • David
    Matt,

    I don't think Zecco' s business model is to ruin the Schwabs of this world. The market they are going into is growing by 150,000! consumers each month since Jan06 due to new government pension rulings. I also learned that Zecco uses the same trading platform and settlement/clearing house as Etrade Canada and as many other professional brokers plus the customers are insured to 25 Million USD...that is more than Etrade as a matter of fact.
    It looks like they got their stuff covered.
    Next to this they will build a massive community that will be able to comment and discuss any financial/investment issues, that also is new to the financial industry as we know it up until now..the establishment is used to pumping info towards the customer one way! Would be great to share information on a customer level, normal language.
  • David
    Matt,

    I don't think Zecco' s business model is to ruin the Schwabs of this world. The market they are going into is growing by 150,000! consumers each month since Jan06 due to new government pension rulings. I also learned that Zecco uses the same trading platform and settlement/clearing house as Etrade Canada and as many other professional brokers plus the customers are insured to 25 Million USD...that is more than Etrade as a matter of fact.
    It looks like they got their stuff covered.
    Next to this they will build a massive community that will be able to comment and discuss any financial/investment issues, that also is new to the financial industry as we know it up until now..the establishment is used to pumping info towards the customer one way! Would be great to share information on a customer level, normal language.
    In all I think they are not out there to ruin the establishment as a Business Model, but I think they may be able to do just that.
    David.
  • I wish the Oct 9th date came today... =) I need to start my buying again...

    -Steven Buda, MBA
  • Morten rocks!!!
  • Please don't tell me this is going to be an ad-based service...
  • Bill
    Too funny. I was just on the Zecco beta site and saw a Google Ad for sogoinvest.com in the "about us" section.
  • WOW...of course that would come up!
  • Lec
    There is not enough info out their about Zecco to make an informed choice on whether to invest with Zeccp; however, Zecco's marketing strategy has been done before. Hype.
  • Lec
    By the way, I know it should be spelled there..
  • SL2005
    I found some features of the trading platform from

    http://www.indextown.com/archives/2006/09/25/tr...

    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

    ...
  • dowjobber
    When you look at a full service broker's financial statements you will find that "commissions" are a small part of the revenue pie. Fees and interest and trading profits are the largest part of revenues. For example a "general account agreement" allows the broker to loan your securities. For this loan of your stocks, they collect interest. This is one of the most lucrative parts of the brokerage industry. Interest is also charged for margin and also collected of free balances (free balances= your money which has not yet been used to pay for a stock) So there is a lot of float of other folks money in brokerage. Years ago,I had one broker that paid customers from the Bank of Guam! And of course there are fees and trading profits, some you see and some you can't see because of a lack of transparency.
    So, no commission trades are certainly doable because execution costs have almost completely disappeared with ECNs which match buyers and sellers.
  • This might actually bring back all the daytraders. We can now expect more volatile markets if it really takes off.
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  • Renters Insurance California f
    This was a great site. I needed to find something for my Homework and This site helped me out so much! Thanx alot!!!!
  • Scott
    Looks like there will be ads featured to generate revenue... but if you do use a trader or get advice the will charge you...
  • Columbus
    You are doing a wonderful thing here on the Internet. I wish you the very best. Kindest regards.
  • Rakesh
    I wanted to start with Zecco but their customer service has deemed themselves completely unrelaible. The representatives I spoke to were very rude and one even pretended he could not hear me when I asked him what his name was (after he was rude to me). He was like "Mr. Rakesh, Mr. Rakesh, I can't hear you" and then he hung up. It was awful. Zecco needs to replace him but I don't even know his name.
  • Spicydesi
    Mr Rakesh,

    You will get what you pay for.



    Move on
  • casino online gambling
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