Zecco has been around for quite some time and has proven itself as a viable trading broker.

If you haven't heard of them by now, Zecco offers free stock trading (no commissions).  10 free trades a day up to a maximum of 40 trades per month.  If you go over the 40 trades/month, then you pay $3.50 a trade after that.  All in all, it is very cheap, you can't beat free.  The most important fees are listed below.

Options are $3.50 + $.60 a contract.

IRA Annual Fees are $30/year.

Account transfers out of Zecco are $50. (This is only if you wish to close your Zecco account.)

There has been a lot of skepticism over whether they will take your money and run as it seems too good to be true, but they are a division of Equinox securities, and utilize Penson Holdings in the background.  They are a member of NASD, and SIPC, which protects securities customers of its members up to $500,000.  It is also run by an ex-Merril Lynch VP.  I highly doubt they will take your money and run.    

I have test driven them and found them to be pretty good if you are not looking to have your hand held when trading stocks and also if you are not expecting much other than free trades. 

Trading 

The trading execution is fairly fast, I did not notice any noticeable lag time.  I am not a hardcore day trader that relies on nanosecond execution however.  My trades are maybe once a month, so most broker's execution time is good enough for me.  

All of my trades were done using the LIMIT trading option.  I did notice that Zecco gave me a better deal when it could. I believe that when you place a LIMIT order using most brokers, they pocket any extra difference they can, but Zecco did not.

For example, I put in a LIMIT order to buy 100 shares of MSFT for $30.
Zecco finds one seller selling 75 shares for $29.90, another seller selling 25 shares for $29.87.

Zecco buys those shares at those prices and passes on the savings to me.

In the case of the majority of other brokers, I believe they charge you the full $30 per share for 100 shares regardless if they find a better deal and keep the extra savings for themselves. 

Money Market Sweep Account (4.38% APY)

They even have a fairly high money market sweep option that is not known to most people and is NOT set up by default.  (What this means is that if you move your money into Zecco, but are not ready to buy any stocks, it will sit in a money market account earning a very competitive 4.38% interest as of 2/19/07.)  In comparison, most of the other brokers I use do not have anywhere near as high an APY as 4.38%.

Click here for the money market sweep form.

Dividend Reinvestment 

The dividend reinvestment at Zecco is not able to be done for partial shares.  Only full shares.  The rest goes into your sweep account. 

Here is Zecco's statement on dividend reinvestment. 

Dividend reinvestment is a feature that is available to our clients and can be setup during the account opening process. If you would like to add this feature after the account opening process is complete, you must submit the request in writing to our customer service department.

Interface/Navigation

The interface is on the clunky side.  I did not like the web 2.0 style interface as it takes up a lot of cpu utilization on some of the PCs i've used.  It also takes a while for the portfolio window to load occasionally, though it is much faster now than it used to be.  It is one of those things that you have to weigh, free trades vs. clunky interface.  I'll take free trades any day.

Also, setting up a money transfer from your bank account to Zecco is somewhat of a pain.  To initiate a transaction, you need to have your Zecco account # handy.  The account number is listed on the page where you login to the Zecco trading section or on the Account Records page.  However there is also another account record to be aware of that is not the correct one.  (I believe it's the Penson Holding's account #, but don't quote me on that.)

Statements 

Every time a trade is executed, they send you a paper trade confirmation statement.  Every month, a statement is sent to your address as well.  As you might imagine, the amount of paper sent to your house can be enormous if you execute many trades a month.  I personally would rather have electronic statements, but the option doesn't seem to be possible at this time.

Support 

I haven't had the pleasure of dealing with their support yet, but from what i've heard from other sites is they may take a few days to respond to their emails.

Final Conclusion 

If you want no frills free trades and aren't a hardcore day trader, open an account with them!  Personally, I plan on using Zecco to execute my index ETF trading strategies.

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