Zecco's Broker Battle

An ambitious new start-up that aims to upend the way individual investors trade stocks is off to a promising start.

Zecco.com, an Ontario, Calif.,- based company that counts LunkKenner Ventures -- the first venture capital firm to invest in eBay's Skype division -- as an early backer, lets investors trade stocks for free while offering services like options trading at discounts below even low-price giants like E*TradeETFC and Charles SchwabSCHW.

The company has signed up about 5,000 new accounts since it launched in October, says Jeroen Veth, co-founder and CEO of Zecco and a veteran of Wall Street powerhouse Merrill Lynch.

That type of growth may pale in comparison with the stratospheric growth rates posted by some Internet companies. But it's still impressive considering the sort of serious, heavily regulated industry in which Zecco is competing -- not to mention its own rigorous enrollment process (Zecco asks for a user's social security number, a form of U.S. government identification, employer information, and information on financial status, among other things).

Zecco is able to give away free trades because the online brokerage business has long stopped making the lion's share of its profits on trading commissions, Veth says. Advances in technology have made trading platforms a commodity, meaning the real money comes from spreads in interest rates and margin lending, Veth says.