Instinet: What It Is, How It Works, and More

Instinet is a global financial services company that provides technology and trading services to buy-side institutions, such as investment banks and asset managers.

Instinet's early days date back to 1987, when it was founded as a specialist in electronic trading, and it has since grown to become one of the largest and most respected players in the industry.

Instinet's technology platform allows for the execution of trades in a variety of asset classes, including equities, options, and futures.

The company's focus on innovation has led to the development of several key technologies, including its proprietary trading platform, Instinet's ECN (Electronic Communication Network).

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Instinet was founded in 1987 by a group of securities firms, including Salomon Brothers, Paine Webber, and Morgan Stanley.

The company's early focus was on developing electronic trading systems for the financial industry.

Instinet launched its first electronic trading platform in 1988, which allowed traders to buy and sell securities electronically.

This innovation marked a significant shift away from traditional floor-based trading methods.

Instinet's platform quickly gained popularity among institutional investors and became a major player in the electronic trading market.

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Instinet was founded in 1969 by Jerome M. Pustilnik and Herbert R. Behrens as Institutional Networks Corp.

The founders aimed to compete with the New York Stock Exchange by providing a computer network for automated buying and selling of equity securities on an anonymous and confidential basis.

Instinet's system went live in December 1969, offering computer services and a communications network for the buyside.

Uptake of the platform was slow through the 1970s, but the company turned to William A. "Bill" Lupien, a former Pacific Stock Exchange specialist, to run the company in 1983.

Lupien decided to market the system more aggressively to the broker community, which helped to expand its market.

Fredric W. Rittereiser, formerly of Troster Singer and the Sherwood Group, joined Instinet as president and Chief Operating Officer, bringing new innovations to the company.

David N. Rosensaft, later SVP of New Products Development, also joined the team, contributing to the company's growth.

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Rittereiser later departed to become CEO of First Jersey and was replaced by Joseph Taussig as Chief Operating Officer.

Together, Lupien, Rittereiser, and Taussig successfully introduced many innovations that made Instinet an integral tool for traders on both sides of the market.

These changes helped to establish Instinet as a major player in the financial industry.

Instinet has a rich history of innovation in electronic trading, with several notable achievements under its belt.

One of the first electronic trading platforms was launched by Instinet in 1969.

Instinet developed the first direct market access system in 1980.

The company also introduced the first after market crossing system in 1986.

In 1993, Instinet OMS was launched, one of the first modern execution management system (EMS) platforms.

Instinet Helix, one of the first market routing platforms, was introduced in 1999.

Here are some of the key achievements of Instinet in a concise list:

Instinet is a global financial securities service that operates an electronic securities order matching, trading, and information system.

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It allows members, primarily institutional traders, and investors, to display bids and offer quotes for stocks, and conduct transactions with each other.

Instinet is an example of a dark pool of liquidity, a private exchange for trading securities that is not accessible by the investing public.

The name Instinet implies a lack of transparency, and it facilitates block trading by institutional investors who do not wish to impact the markets with their large orders.

There were 74 registered Alternative Trading Systems, or dark pools, as of February 2024, according to the SEC.

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Instinet's trading platform has made trading more efficient, transparent, and accessible, reducing the cost of trading and increasing the speed of execution.

Large institutional holders use Instinet to privately trade amongst each other, without transparency, which does not affect the wider market. This allows them to buy or sell large quantities of stocks without influencing the stock price.

Instinet's platform has also facilitated the development of new trading strategies, such as high-frequency trading, which involves making thousands of trades per second.

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A cross trade is the matching of buy and sell orders outside of an exchange. This typically happens when brokers execute a trade between two clients, without sending the orders to the exchange.

The broker fills the trade as a cross and then reports the trades to the exchange later with all the correct information.

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Trading in the stock market can have a significant impact on the wider market.

Large visible block sales tend to decrease the stock price, which is why financial institutions often look to trade privately via services like Instinet.

Financial institutions, such as hedge funds, buy and sell large quantities of stocks, which could greatly influence the price of the stock they are trading.

Instinet allows for financial professionals to privately trade amongst each other without the public having access, reducing the risk of large trades affecting the wider market.

By allowing large institutional holders to buy or sell in large volumes without transparency, Instinet's platform helps to reduce volatility in the stock market.

The rise of electronic trading, led by Instinet, has made trading more efficient, transparent, and accessible, reducing the cost of trading and increasing the speed of execution.

Instinet's platform has facilitated the development of new trading strategies, such as high-frequency trading, which involves making thousands of trades per second.

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Instinet offers a wide range of services to its clients, including trading services, research and analytics, and commission management.

Instinet's trading services are designed to help clients execute their trading strategies effectively and efficiently. They include algorithmic trading, program trading, and direct market access.

Instinet's algorithmic trading service allows clients to automate their trading strategies, while its program trading service allows clients to trade a basket of securities in a single transaction.

Commission management is a crucial aspect of trading, especially for institutional investors who trade in large volumes and incur significant commission costs.

Instinet's commission management service is designed to help clients manage their trading costs, providing them with tools to track their commissions and negotiate better rates with their brokers.

This service is particularly valuable for institutional investors who can use it to reduce their trading costs and improve their overall trading performance.

By helping clients manage their commissions, Instinet can help them save money and achieve better results in the long run.

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Instinet's research and analytics services are designed to help clients make informed trading decisions. These services include market research, trading analytics, and risk management tools.

Instinet's market research service provides clients with insights into market trends and developments. This helps clients stay ahead of the curve and make better trading decisions.

Instinet's trading analytics service provides clients with tools to analyze their trading performance and identify areas for improvement. By using these tools, clients can refine their trading strategies and achieve better results.

Instinet's risk management tools help clients manage their trading risk. This is especially important for clients who are new to trading or who are looking to minimize their losses.

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Instinet offers a wide range of services to its clients, including trading services, research and analytics, and commission management.

Instinet's trading services are designed to help clients execute their trading strategies effectively and efficiently. These services include algorithmic trading, program trading, and direct market access.

Instinet's algorithmic trading service allows clients to automate their trading strategies, while its program trading service allows clients to trade a basket of securities in a single transaction.

Instinet's direct market access service allows clients to place their orders directly on the exchange.

Instinet provides research and analytics services to its clients, including market research, trading analytics, and risk management tools.

Instinet's market research service provides clients with insights into market trends and developments.

Instinet's trading analytics service provides clients with tools to analyze their trading performance and identify areas for improvement.

Instinet's risk management tools help clients manage their trading risk.

Instinet will also offer U.S. equity research and U.S. research sales services through its agency brokerage platform in the Americas.

The future of TIOmarkets looks promising, thanks to its partnership with Instinet.

Instinet's pioneering role in electronic trading positions it well to take advantage of new opportunities.

As electronic trading continues to evolve, both Instinet and TIOmarkets are well-positioned to thrive.

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In February 2007, Nomura purchased Instinet for a reported $1.2 billion, operating it as an independent subsidiary and later transferring electronic trading in the United States to Instinet in May 2012.

Instinet has since become Nomura's execution services arm in all markets globally excluding Japan, with the goal of eventually making Instinet the electronic trading arm for all of Nomura.

In June 2016, Instinet incorporated Nomura U.S. Equity Research into its agency execution platform, integrating the research team and offering a focused, boutique-style content platform to clients.

In 2001, Reuters went public with Instinet's IPO, retaining a 62% ownership stake.

This significant investment allowed Reuters to maintain control over Instinet's operations for several years.

Reuters held onto its majority stake until 2005, when NASDAQ acquired Instinet and retained the INET ECN.

In February 2007, Nomura purchased Instinet from Silver Lake for a reported $1.2 billion.

Instinet is today operated as an independent subsidiary of Nomura, run by CEO Ralston Roberts.

In December 2009, Instinet worked with the Make-a-Wish Foundation to grant wishes to 40 children with life-threatening illnesses.

Nomura announced in May 2012 that it would transfer electronic trading in the United States to Instinet.

However, in September 2012, Nomura announced that it would instead make Instinet its execution services arm in all markets globally excluding Japan.

Instinet is a broker-dealer that offers a variety of trading services to its clients, including algorithmic trading, program trading, and direct market access. These services provide clients with the flexibility to execute their trading strategies more effectively and efficiently.

Instinet's trading platform allows traders to specify a wide range of parameters, such as the price, volume, and timing of their orders. This flexibility enables traders to execute their trades more effectively and efficiently.

Instinet's electronic trading platform has had a profound impact on trading, making it more efficient, transparent, and accessible. By allowing traders to execute their orders directly, it has reduced the cost of trading and increased the speed of execution.

Instinet's platform has facilitated the development of new trading strategies, such as high-frequency trading, which involves making thousands of trades per second. This type of trading has become increasingly popular due to the speed and efficiency of Instinet's platform.

Here are some benefits of using Instinet:

Alternative Trading Systems Rules were introduced by the U.S. Securities and Exchange Commission in the late 1990s. These rules aimed to regulate the growth of electronic communication networks like Instinet.

The Order Handling Rules, part of these regulations, required electronic communication networks to provide fair and transparent trade execution. This helped to level the playing field for all market participants.

Instinet, a pioneer in electronic trading, was affected by these rules. The company expanded internationally and grew rapidly, but also faced increased competition from new entrants.

Here are some key facts about Alternative Trading Systems Rules:

By the early 2000s, Instinet's market share had eroded due to missteps and new competitors. This led to Instinet's merger with Island ECN in 2002.

Instinet is an institutional, agency-only broker that executes trades for various types of investors, including asset management firms, hedge funds, and pension funds.

It serves as the independent equity trading arm of its parent, Nomura Group, and offers a range of services, including investment market insights, algorithmic trading strategies, and access to unique liquidity.

Instinet is considered an Alternative Trading System, or dark pool, which means it's a private exchange for trading securities that are not accessible by the general public.

A dark pool like Instinet is beneficial for institutional investors because it allows them to trade without revealing their intentions, potentially resulting in a better price than on an exchange.

Instinet's trading platform is designed to provide traders with a high level of control over their trades, allowing them to specify parameters such as price, volume, and timing.

This flexibility enables traders to execute their strategies more effectively and efficiently, reducing the cost of trading and increasing the speed of execution.

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Here are some key characteristics of Instinet:

Instinet's electronic trading platform has had a profound impact on trading, making it more efficient, transparent, and accessible.

Instinet was founded in 1967 by Jerome M. Pustilnik and Herbert R. Behrens as Institutional Networks Corp. It was incorporated with the goal of competing with the New York Stock Exchange by establishing computer links between major institutions.

Instinet is Wall Street's oldest electronic communications network, or ECN, and it played a significant role in evolving electronic trading systems. This allowed trading to continue even during times of market stress, such as the Crash of 1987.

Instinet has undergone several changes in ownership over the years. In 1987, Reuters acquired the entire business, and then in 2007, Nomura purchased the firm from Silver Lake for $1.2 billion. Today, Instinet is operated as an independent subsidiary of Nomura.

Instinet's growth accelerated in the mid-1980s under Lupien's leadership, which led to the firm's rapid expansion.

The Crash of 1987 showcased Instinet's electronic trading system's value, as it allowed trading to continue even when brokers and market makers were unavailable.

Reuters, which had already acquired a portion of Instinet in 1985, took control of the entire business in May 1987.

Instinet remained an independent subsidiary, with operations based in New York.

Lupien and COO Murray Finebaum resigned shortly after the acquisition.

Instinet was founded in 1967 by Jerome M. Pustilnik and Herbert R. Behrens as Institutional Networks Corp.

Instinet aimed to compete with the New York Stock Exchange by establishing computer links between major institutions with no delays or intervening specialists.

Instinet is Wall Street's oldest electronic communications network, or ECN.

Reuters acquired Instinet in 1987, and this acquisition marked a significant shift in the electronic communications network landscape.

After the acquisition, Instinet and other electronic communications networks evolved into major threats to the established stock exchanges.

Reuters later acquired Island ECN in 2002 and merged it with Instinet, expanding its electronic communications network and brokerage business.

Nasdaq then acquired Inet ECN in 2005, and Instinet was sold to a private equity firm.