TradeKing’s Merger with Zecco
We have big, exciting news to share today: TradeKing and Zecco have agreed to merge businesses. It’s a move we firmly believe will offer you great benefits, both in the near- and long-term.
Combining forces with Zecco makes sense on several levels. Zecco and TradeKing opened our doors around the same time, levying a very similar challenge to “mega brokers”: why not give investors a better deal, with fair, easy-to-understand pricing for everyone? As each firm evolved, other overlaps emerged. We both emphasize innovative technology. We both recognized early the value of social media for investors and traders, building vibrant online communities where traders can connect with each other.
When Mike Raneri became CEO of Zecco in 2009, the synergies started to seem downright uncanny. As it happens, Mike and I have known each other for years: we first met at Rochambeau Middle School in Southbury, CT and were best buddies in high school at Southbury’s Pomperaug High School. When I headed to the Midwest after high school, we stayed great friends, even from a distance. Our paths intersected again in our post-college years: when I was struggling through law school, not at all certain I’d picked the right career path, Mike stepped in with some well-timed advice: why not join his employer, Quick & Reilly, as a broker trainee? I did, and the rest is history. (I recapped this whole career twist in a previous blog post.)
When Mike took the reins at Zecco, I saw his imprint immediately on the firm – and I liked what I saw. Mike and I not only shared history as friends, we also see eye-to-eye on what a great online brokerage looks and acts like. We both believe in old-fashioned customer service, where we treat each client the way we ourselves like to be serviced: with transparency, dignity and accountability. When we first broached the subject of merging, our vision of the road ahead was also similar: to challenge the mega-brands even more, we’d need to take a quantum leap in size and scale.
We all know the obfuscating corporate-speak brokerages use in discussing mergers – so let me talk plainly about the benefits of this one. Our cultures, philosophy and client profile are already complementary. Our central price point is now identical (and will stay the same post-merger): $4.95 per trade plus 65c per contract. Each of us bring near-term product upgrades the other currently lacks: by merging, TradeKing clients will quickly gain access to Zecco’s forex trading platform, for instance, a superior iPhone trading app and, finally, a great Android app. In turn, we’ll offer Zecco clients access to our top-rated tools for options traders, a fixed income platform, fantastic trader education and award-winning customer service.
You’ll keep the same tools, products, pricing and service that attracted you to TradeKing in the first place. But you’ll gain quite a bit more. The merger will advance our product offering for both client bases. It should also give us the scale to command even better pricing from our vendors and more attention from our clearing firm – savings that we can pass along to our clients and/or invest in further platform upgrades.
At the same time, we’re staying true to our roots. I’ve said many times before: active traders need to be attracted, not acquired like cattle. We know we need to earn your business every day, and the same holds true for Zecco clients. We need to hit the ground running from day one: with a great combined offering in the short term, and a host of exciting future opportunities in the long run.
This is a game-changer, but we’re up for the challenge. We wanted to remake the online brokerage industry along fundamentally different lines – and now we’re at the next phase. Our next challenge is to deliver real additional value fast and seamlessly to all our combined clients, and to grow in ways that only brighten our winning spark.
Can we school the mega-brokers in delivering better service, better pricing, a better product, with real community and transparency – all while scaling up intelligently, in ways advantageous to everyone? We think so.
Here’s where you can learn more about the merger:
• Watch this video of me and Zecco's CEO
• Check out these Frequently Asked Questions – we’ll be updating these frequently as details emerge
• Get your questions answered in our merger forum post
• Contact us with any additional questions specific to you or your account
I’d love to hear from you directly on this historic move for our firm. What product improvements do you want us to prioritize as we move forward? What are your biggest concerns? Any advice on how we should handle the merger? Good, bad or otherwise, please share your thoughts in the comments below. Two-way communications with our clients have helped us tremendously to shape TradeKing in meeting your needs – and hopefully exceeding your expectations. I look forward to your input.
Comments
Follow commentsBuster01 posted May 15, 2012 (11:13AM)
Awesome quote. With the exception of a couple blips, I would say that this hold true.
bigdog posted May 15, 2012 (12:30PM)
Don
CrazyBill posted May 15, 2012 (02:02PM)
(1) will Maxit be available to Zecco accts? I have two Zecco accts and don't like the expensive Gainskeeper option. It must be a big earner for Zecco, but most other online brokers (and TK) seem to be offering the free Maxit to produce Sched D for tax reporting. Gainskeeper is overkill and overpriced for tax reporting.
(2) I like the more traditional and practical Zecco login, and hate the tradeking password login.
(3) Zecco connection seems to last 2-3 times the TK connection. If I go out to other views (like Google finance or other) it is rare that TK is still connected. That left me using Zecco more often than TK just because I'm a lazy S...B - see (2) above.
If I had to pick a deal breaker, it would be Maxit. If Maxit goes away in TK, oh well...
Net Worker posted May 15, 2012 (03:07PM)
Don,
I like your ambition and am hopeful the merger will be good for us (even though it is a bit disconcerting to see competition decreasing in this space). I would love TK/Z to offer, in your words, "REAL social." I like both TK and Zecco, but the reality is that most of what both firms call "social" is really just a lot of individuals all doing their own thing and isn't very easy for the broader group to benefit from. Both firms are providing just space for a potluck, when you really could be hosting the best dinner party around for about the same price and effort! Help us help each other. Now THAT would be "real social" that could beat the other firms in more ways than one. Good luck!
PaleRider posted May 15, 2012 (04:06PM)
I am in the process of transferring my accounts from Scottrade because TK offers a fractional DRIP, and secondarily because of the lower trading costs. With the merger, will you continue to offer a fractional DRIP, and keep the connectivity with Quicken that you have now?
A couple things I really liked about Scottrade that TK does not have is Money Direct, where I could deposit funds and literally begin trading within 10 seconds, and the ability to add multiple ACH accounts, in my case a checking account with one bank and a money market account with another bank. Do you foresee adding these features anytime in the near future?
Thanks and good luck with the merger!
incubus posted May 15, 2012 (08:03PM)
letsgoblue posted May 15, 2012 (08:04PM)
Pope Austin I posted May 15, 2012 (10:24PM)
El Dorado posted May 15, 2012 (11:00PM)
incubus posted May 16, 2012 (03:15PM)
bigdog posted May 16, 2012 (09:39PM)
Everyone: apologies for the delay in responding to all this great feedback. I've been on airplanes and phone calls nonstop, as you can imagine!
It's still a bit too early to answer most of these questions specifically. Our first step is to get the merger approved by FINRA, which should take 30-60 days, but is not a process that we can control. Then we move into integration planning, which will include a detailed product-gap analysis between the two companies' products (including what both of us have in the future-release pipeline). Already certain themes are emerging, like retaining Maxit, etc., so we're noting those as we go. As I mentioned above, we see some near-term product wins for both sides later this year. For TradeKing clients, that means access to forex trading and a broader range of more powerful mobile apps, including native iPhone and, finally, Android.
Net Worker, we'll definitely pay close attention to how we merge and strengthen our unique investor communities. Both sides agree about the power social investing brings to our clients' experience, and both agree we can do a lot more to create the best possible social/trading experience.
To letsgoblue's question about TradeKing's API, I believe that strategy is one of the smartest ways to lay a path for constant innovation – I am passionate about that.
As always, client feedback like this is invaluable to us. We're compiling a list of ideas from both this blog, the merger forum post, and of course from conversations happening right now in Zecco's community. So by all means, keep 'em coming! We intend to stay as responsive to client needs as ever on this.
Be Good,
Don
p.s. Incubus and Buster01, thanks for the props, and glad you dug those two lines from the announcement! I must admit they felt good to say. : -)
MD Capital Management posted May 17, 2012 (02:10PM)
Net Worker posted May 18, 2012 (11:07AM)
Thanks for the response, Don. Awesome to know you are keeping an eye out for our feedback amidst all the plane flights and phone calls. And good to know that the merged entity will be doing even more to improve the social/trading experience. One thing that I think could really lock in your leadership in that area would be a layer of feedback and/or filtered intelligence across the community -- you know, help us help each other. Have you guys looked at smart collaboration products (such as Trueline or others)? Something like that would definitely "be good."
El Dorado posted May 18, 2012 (10:20PM)
incubus posted May 19, 2012 (02:21PM)
However, if it comes down to a claymation celebrity death match - my money's on Don.
Scrounge posted May 20, 2012 (02:01PM)
absinc posted May 21, 2012 (02:45PM)
I'll copy what I posted today at Zecco CEO's blog about penny stock policies:
Zecco has caused me massive trouble due to a penny stock I could easily purchase and sell in 2011 but then Penson changed the rules in middle of the game and I was totally stuck (neither could I sell given Penson's order size restrictions on illiquid stocks to 10% of 20-day average daily volume, which on illiquid stocks renders'em impossible to trade at all, neither could I transfer them to another broker as they either don't take in pennies or they don't apply to foreign investors)
If you want some constructive criticism after all this mess, here it is:
- $9.95 stock trades for penny stocks, plus a 3-5% sale proceeds surcharge if the stock is not-DTC eligible (in order to partially compensate the brokerage for the costs). $4.95 for regular stocks.
- DTCC fees on non-DTC eligible stocks NOT passed to customers (neither eTrade or Fidelity pass'em on, I think also Scotrrade skips'em).
- If a penny stock is marked by the DTCC as non-DTC eligible, allow traders to get only OUT of positions - SELL side orders - online (traders never call in!) but BLOCK any further BUY orders on the stock to protect both the brokerage and customers from entering a blacklisted stock.
BTW even if you continue to use the "services" of Penson (watch out for a penny stock unfriendly company such as PNSN becoming a penny stock themselves!!), with the combined size of TK+Zecco you could go self-clearing in short. In fact, one of the reasons to keep Penson was to keep account numbers intact. And so, "Tradekingz" (or whatever) could just create its own clearing subsidiary and copy-paste the account numbers from Penson to keep it transparent for the end user.
Coffeenut posted May 28, 2012 (06:33PM)
Hello Everyone :) it's been along time!
bigdog posted May 29, 2012 (09:01AM)
Barron's Electronic Investor writer, Theresa Carey, covers the merger here:
Two Facebook Followers Unite
goldensax22 posted July 30, 2012 (02:36PM)
bigdog posted July 30, 2012 (05:13PM)
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