The stock brokerage business was one of the first industries that was fundamentally disintermediated by the Internet. In an earlier post I both wrote about the history of the stock brokerage business and about William Yeh, the Chairman of Sogo Invest. Yeh was the man who, by launching SogoInvest where active traders could take advantage of $1.00 trades, completed the 30 year history of the deregulation and disintermediation of the stock brokerage business.

In an interview Yeh gave to fellow blogger Grant Wittenborn, he made it clear that he felt the day trader and the average investor should be given the low cost opportunities available to institutional investors. He was clear in that interview that he hoped to have people with Sogo over the long term to take advantage of low cost investing, and that for the new or smaller trader he would provide easy purchase of fractional shares. In a conversation I was fortunate to have with Yeh he explained to me that, based upon stock exchange and clearing costs, any trading fee lower than $1.00 would be a money loser.

Well, look at what has happened since SogoInvest opened its doors for business on July 11th. Bank of America, one of the financial giants that had taken it on the chin during the last ten years of disintermediation has come out with’ free’ trades. Given the amount of marketing dollars they are spending, it is clear that trading can’t be free. Sure …

As regular readers of this blog know, I have been exploring the subject of disintermediation.  It is a dynamic force that has and will be reorganizing our culture and economy.  In an early post on the subject, I pointed out that in the late 1990s the Internet acted as the agent of disintermediation for the travel and stock brokerage business.  It became possible for people to buy and sell stocks on-line at a fraction of the cost they had incurred even years earlier.  This helped launch the day trading phenomenon.

Well, it now seems that the last bit of disintermediation is going to occur in the on-line stock trading and investment marketplace.  Today it was announced that a new on-line brokerage company has been launched.  It is called SogoInvest, www.sogoinvest.com and it will offer real-time trades for $3.00 down to $1.00.  That is profound, as all the other major on-line brokerages are in the range of $7 – 12 a trade.  This means that the last step in economic disintermediation has just occurred.

 In addition, this new company will allow investors to buy and sell fractional shares of stock.  For example, if you think Google is a good investment, but you can’t afford 100 shares at $400, you just buy say $3,000 or any amount of Google.  This opens up stock trading and investing to anyone, which is another part of disintermediation, opening a market to anyone that wants to participate.  To that end, there are no minimums to open …