Zecco.com announced some changes to their commission structure this weekend. For those of you not familiar with Zecco Trading, they are an innovative new brokerage that offers commission-free stock trades, and provides a uinique social networking platform where traders can share data about their real-money trades.

Zecco’s plan was to earn its revenue primarily through margin interest, option commissions, and adsense revenues. Up until now, Zecco had offered 40 free trades per month. However, over the weekend they made some adjustments to their structure. The new structure will be as follows:

Account Balance Equity Trades Option Trades
$2,500 and up 10 free per month, $4.50 thereafter $4.50 + $0.50 per contract
Below $2,500 $4.50 per trade

As you can see, the free trade allowance has been reduced to 10 per month, and the commission for additional trades has been increased from $3.50 to $4.50. So why the change?

Sabin Speiser, Zecco’s head of marketing, explains it as follows:

Free trading is here to stay. Our mission today is the same as it was a year ago, to level the playing field for the everyday investor. If you’re like the majority of our customers (and over 98% of online investors), you trade less than 10 times per month, much less than the 40 free trades we now offer. You are, however, clamoring for more sophisticated trading functionality and the superior customer service you deserve. We hear you and we’re adjusting our offer to get you more of what you need.

Instead of paying for free trades you may not use, we’re investing that money in the tools and functionality that you will. Over the coming months you can expect:

  • Significant investments in the number of service representatives and training.
  • Addition of 3 and 4 legged options strategies so you can trade butterflies, condors, and more.
  • Release of a sophisticated options analytics platform.
  • Access to ZeccoShare, the ground-breaking investor social network at zecco.com. Independent of Zecco Trading, ZeccoShare lets you share your brokerage holdings, trade history and performance anonymously, and view the same of others’. Now, you can debate stocks with other investors and know that they are putting their money where their mouth is.

And much more, including fantastic new premium services at a typically fantastic Zecco price:

  • Streaming quotes, news and charts.
  • Tax planning and performance tools powered by GainsKeeper®

You can read between the lines and see that Zecco has had to make some adjustments to its revenue model. This is hardly surprising — it’s a young company with a new model, and there were naturally going to be some kinks to iron out. Some traders have criticized the somewhat thin toolset Zecco presently offers, so it’s good to see that they’re planning on expanding it.

At the end of the day, $4.50 per trade is still close to the cheapest commission you can get anywhere, and if you keep your trades to under 10 per month (as most investors do), you’ll still be able to trade 100% free. In short, we believe Zecco is still one of the best values available.