Apparently Zecco.com, a start-up brokerage where I keep most of my “play money”, didn’t do so well during the last week. People report having problems logging into their accounts due to all the market turbulence. I was luckily not affected, as I haven’t had time to trade much at all.
In response, they are offering unlimited free trades (both stock and options) for the entire month of October to all customers and all accounts. Also, the $2,500 minimum for free trades is being waived. From a recent announcement:
To show our appreciation for your loyalty, we have decided to make October a 100% unlimited free trading month. This means that between October 1st and October 31st you can make unlimited equity and options trades commission-free. As far as I know, this has never been done in the history of the brokerage industry, until now. But then again, we are seeing things in the market we never would have believed, until now.
Eligibility
* The no-commission stock and options trade offer applies to all Zecco Trading accounts in good standing.
* The offer applies to equity and options trades, including multi-legged options orders and all options contracts.
* Mutual fund trades are not eligible for the offer.
* There is no minimum equity balance requirement or minimum trade volume restriction.
* All account types are eligible, including IRA.
* The offer is effective for equity and option trades placed and executed 10/1/08 through 10/31/08. The standard free trading program and options pricing will resume 11/1/08.
What are some good ways to take advantage of this offer? Maybe time to do some tax-loss harvesting? I suppose active traders and daytraders should be happy and go nuts. 🙂 Since their normal offer is to give you 10 free trades per month, I usually consider Zecco best for buy-and-hold investors to buy shares of ETFs regularly and cheaply. Now I guess you could dollar-cost-average every day.
The free options trading do sound interesting, as they used to cost $4.50 + $.50/contract. You never see free options trading. Maybe it’s time to try some test trades out? It would be interesting to learn to create proper hedges.
As an aside, I recently moved all of my cash out of my Zecco account since I wasn’t trading (no free time) and wanted to earn more interest elsewhere. However, they then de-activated my account. It wasn’t closed permanently and a phone call got it open again, but just an FYI if you experience weird things. You can read about my previous experiences with Zecco here.
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Hmm… might want to avoid trading (buying then selling) a stock 4 or more times in any 5 consecutive business day period. Otherwise you will be classified by the SEC as a “pattern day trader”, sparking a $25K margin call if you don’t already have $25K in you zecco account.
Thanks for the post! This offer’s definitely unlike any other in the industry.
Anyone opening a Zecco Trading account should definitely check out the Zecco community as well. People can share their portfolios, trades and performance – it’s a great place to get ideas and advice from other investors, especially from top performers.
– Tony Leach
Zecco Product Manager
So…if there’s turmoil in the banking/investment industry, wouldn’t it be likely that this trickles down to brokerages? That is, what are the odds that Zecco will get “consolidated” or cease to exist because they can’t fund a functioning business on the thin margins they are using? Errr…I’d rather not find out how the Treasury intends to rescue money market sweep accounts, nor how SIPC insures shares. Could hold up the money at the exactly wrong time. I chose to diversify into Fidelity and Vanguard on the assumption that they are big enough to wish to continue operating as independent entities. Discussion welcomed and YMMV.
wamu just tanked…
Hi John,
I wouldn’t promote Zecco mainly because trading can cost people a lot of money and since Zecco is notorious for being overloaded with orders, the website has regularly shut down. Hence, when you have an unreliable discount broker that won’t function during ‘crazy’ market moments, that’s exactly when traders or investors need access to their portfolio.
I only say this because I’ve seen Zecco fail enough times to tell others to be very cognizant when considering going to Zecco. There are a few other discount brokers that are far better.
These are just my two pennies. I hope this does not damage your blog or the faith of your readers.
The bottom line, stay away from Zecco. Free trades or not, you’re seriously risking your money.
thank you,
-M
I agree that active traders need reliability, and freezing up is not good. Other brokers had some hiccups as well. MB Trading messed up some things because they share the same clearing firm (Penson). I would not use Zecco if you are a very active trader. For those that have a high volume of trades, other brokers are cheaper anyhow (like MB Trading, ironically).
Zecco gives you 10 free per month, which is great for buy and hold into passive ETFs, which the type of investing that I recommend. And if you are buy and hold, there isn’t much problem. You are allowed to call in and make trades over the phone if you really need. I didn’t have to buy or sell anything during this “crazy” market.
Anybody know what it will cost later to sell shares bought through Zecco? Or how much it would cost to eventually move your Sharebuilder shares to Zecco, or vice versa, if you felt the need to consolidate?
Also,
“Zecco Trading charges a nominal fee ($1.50 per confirmation and $2.00 for statements) to cover the postal delivery costs for paper documents.”
Do you know, is there any way to avoid these fees? Do they only apply in certain situations, or can you go all-electronic (paperless) to avoid them? Or do you have to deal with those fees? And if so, how often do they come up?
Thanks for the post!
Amanda, if you opt to go paperless, they waive the fee (since there’s no postal charge!)
Does anyone know if this offer applies to new accounts as well?
-Shamiq
Amanda – Electronic notification is an option and you are not charged if you go that route.
There is a huge problem w/ Zecco. It takes 3 days for them to process your transaction, so it is very hard to do tax harvesting efficiently or rebalance. i.e. if you sell some shares of company A,
you will not be able to use those proceeds for 3 days for buying, unless you want to buy on margin. Wells Fargo is much better deal in that regard as proceedes of a sale are instantly available for reinvestment.
That’s the SEC T+3 settlement time. Apply for a margin account, and you get the buying power updated immediately WITHOUT having to pay any interest. This is because both buys and sells will settle in 3 days.
I noticed free trades aren’t really free trades. You have to read the fine print catch below from Zecco’s website. When you sell, you will get fees. That shows you if it’s too good to be true, it usually is.
Equity trades include stock and ETFs (Exchange Traded Funds). With Zecco Trading, you get 10 free online stock trades each month with $2,500 or more, otherwise, it’s only $4.50 per stock trade. (Note: There are transactional fees on sell orders in the free trades.)
Yes, these are Section 31 fees charged by the SEC. They are tiny, and run about 1 cent per $150 in trade size. More infomation here.
I thought it meant that you were charged $4.50 to sell the stock with the free trades. Thanks for the clarification.
I might call them to make sure that this is accurate.
So what are the fees for selling????
A buy or sell are both one trade. You get 10 free trades/month. So as long as you have trades left, it’s free commission to sell. Only additional cost of a few cents due to SEC fee.
Just for your information. Zecco from yesterday changed the price to 10 free trades for 25k account value. not 2.5k anymore. Also if you made 25 trades 10 trades are free. Zecco no longer different from wellforgo or bank of america rates. Zecco sucks!!!.