Instinet Incorporated is an institutional, agency-model

broker A broker is a person or entity that arranges transactions between a buyer and a seller. This may be done for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither ...

that also serves as the independent

equity trading A stock trader or equity trader or share trader, also called a stock investor, is a person or company involved in trading equity securities and attempting to profit from the purchase and sale of those securities. Stock traders may be an inve ...

arm of its parent,

Nomura Group is a financial holding company and a principal member of the Nomura Group, which is Japan's largest investment bank and brokerage group. It, along with its broker-dealer, banking and other financial services subsidiaries, provides investment, fin ...

. It executes trades for

asset management Asset management is a systematic approach to the governance and realization of all value for which a group or entity is responsible. It may apply both to tangible assets (physical objects such as complex process or manufacturing plants, infrastr ...

firms,

hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...

s, insurance companies,

mutual fund A mutual fund is an investment fund that pools money from many investors to purchase Security (finance), securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in ...

s and

pension fund A pension fund, also known as a superannuation fund in some countries, is any program, fund, or scheme which provides pension, retirement income. The U.S. Government's Social Security Trust Fund, which oversees $2.57 trillion in assets, is the ...

s. Headquartered in New York City, the company provides sales trading services and trading technologies such as the Newport EMS, algorithms, trade cost analytics, commission management, independent research and

electronic communication network An electronic communication network (ECN) is a type of computerized forum or network that facilitates the trading of financial products outside traditional stock exchanges. An ECN is generally an electronic system accessed by an electronic trad ...

Chi-X Europe BATS Chi-X Europe is a London-based, order-driven pan-European equity exchange that has been a subsidiary of BATS Global Markets since 2011. It is a low latency, low cost alternative to exchange traded equities and exchange-traded funds (ETFs ...

and Chi-X Global. According to industry research group Markit, in 2015 Instinet was the 3rd-largest cash equities broker in Europe.

History

Early history

Instinet was founded by Jerome M. Pustilnik and Herbert R. Behrens and was incorporated in 1969 as Institutional Networks Corp. The founders aimed to compete with the

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...

by means of computer links between major institutions, such as banks, mutual funds, and insurance companies, with no delays or intervening specialists. Through the Instinet system, which went live in December 1969, the company provided computer services and a communications network for the automated buying and selling of equity securities on an anonymous, confidential basis. Uptake of the platform was slow through the 1970s, and in 1983 Instinet turned to William A. "Bill" Lupien, a former

Pacific Stock Exchange The Pacific Exchange was an American regional stock exchange in California, from 1956 to 2006. Its main exchange floor and building were in San Francisco, California, with a branch building in Los Angeles, California. In 1882, the San Francisc ...

specialist, to run the company.

Bill Lupien William A. Lupien (October 6, 1941 – April 15, 2021) was an American business executive in the financial industry. He traded actively in the financial markets throughout his career. He was a Specialist and later Exchange Governor on the Pacif ...

decided to market the system more aggressively to the broker community, rather than focus exclusively on the buyside as his predecessors had. To expand its market, Lupien brought on board Fredric W. Rittereiser, formerly of Troster Singer and the Sherwood Group, as president and Chief Operating Officer and David N. Rosensaft as Vice President (later SVP) of New Products Development. Rittereiser later departed to become CEO of First Jersey and was replaced by Joseph Taussig as COO. Together, they successfully introduced many innovations which made Instinet an integral tool for traders on both the "buy" and "sell" sides of the market.

Reuters acquisition

As a result of Lupien's refocusing of Instinet (which the business was renamed in 1985), the firm grew rapidly in the mid-1980s. During the

Crash of 1987 Black Monday (also known as Black Tuesday in some parts of the world due to time zone differences) was a global, severe and largely unexpected stock market crash on Monday, October 19, 1987. Worldwide losses were estimated at US$1.71 trillion. ...

electronic trading system allowed trading when brokers and market makers were unwilling to answer their phones during the free-fall.

Reuters Reuters ( ) is a news agency owned by Thomson Reuters. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide writing in 16 languages. Reuters is one of the largest news agencies in the world. The agency ...

, which in 1985 had acquired a portion of the firm, acquired the entire business in May 1987, though under the deal Instinet would remain an independent, New York-based subsidiary. Lupien and then COO Murray Finebaum would resign shortly thereafter.

Alternative Trading Systems regulations

Under Reuters, the Instinet platform continued to grow through the late 1980s and into the early 1990s. By the time that the

U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

introduced the Order Handling Rules and

alternative trading system Alternative trading system (ATS) is a US and Canadian regulatory term for a non-exchange trading venue that matches buyers and sellers to find counterparties for transactions. Alternative trading systems are typically regulated as broker-dealers r ...

s (ATS) regulation in the late 1990s. In 1992, Instinet expanded internationally. Douglas Atkin led the effort and by 1998 Instinet was operating in over 20 world markets and had grown revenues to approximately $100 million. Instinet was the dominant

. However, these rules also gave rise to new competitors, some of whom employed new pricing schemes. By the early 2000s, these competitors, helped by missteps at Instinet that included rapid expansion, over-spending and slow uptake of technology, had managed to erode the firm's market share. As a result, Instinet in 2002 merged with the

Island ECN Island ECN was one of the first electronic communication networks established for the trading equities in the United States. Founded in 1996 by Datek Securities veterans Jeff Citron and Joshua Levine, Island executed its first trades in 1997. His ...

, renaming the Island technology platform

Inet Inet was an electronic trading platform based on a system developed by Instinet in the 1970s that merged with Island ECN in 2002 and was subsequently acquired by NASDAQ in 2005. Inet, like other electronic communication networks, was an order-pa ...

Public listing

Reuters went on to

IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...

Instinet in 2001 keeping a 62% ownership stake. It would hold this until the 2005 acquisition of Instinet by

NASDAQ The Nasdaq Stock Market (; National Association of Securities Dealers Automated Quotations) is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list ...

in 2005, in which Nasdaq retained the INET ECN and subsequently sold the agency brokerage business to

Silver Lake Partners Silver Lake Technology Management, L.L.C., is an American global private equity firm focused on technology and technology-enabled investments. Silver Lake is headquartered in Silicon Valley and New York, and has offices in London, Hong Kong, and ...

Nomura acquisition

In February 2007,

Nomura Nomura (written: 野村 "field village" or 埜村 "wilderness village") is a Japanese surname. Notable people with the surname include: * , Japanese volleyball player * , Japanese-American baseball agent * , Japanese voice actor, including in t ...

purchased the firm from Silver Lake for a reported $1.2 billion. Instinet is today operated as an independent subsidiary of Nomura and run by CEO Ralston Roberts. In December 2009, in commemoration of its 40th anniversary, Instinet worked with the Make-a-Wish Foundation to grant wishes to 40 children with life-threatening illnesses. In May 2012, Nomura announced that it would transfer electronic trading in the United States to Instinet, with the goal of eventually making it the electronic trading arm for all of Nomura. However, in September 2012, Nomura announced that it would instead make Instinet its execution services (cash, program and electronic trading) arm in all markets globally excluding Japan.

Achievements

Instinet is credited with several firsts in electronic trading. In addition to launching one of the first

electronic trading platform In finance, an electronic trading platform, also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a financial intermediary. Various financial products ...

s in 1969, Instinet developed: * 1980: First

direct market access Direct market access (DMA) in financial markets is the electronic trading infrastructure that gives investors wishing to trade in financial instruments a way to interact with the order book of an exchange. Normally, trading on the order book i ...

system * 1986: First after market crossing system * 1993: Instinet OMS, one of the first modern

execution management system An Execution management system, or EMS, is an application utilized by traders designed to display market data and provide seamless and fast access to trading destinations for the purpose of transacting orders. This application contains broker provi ...

(EMS) platforms * 1999: Instinet Helix, one of the first market routing platforms * 2007:

, the first and largest European

multilateral trading facility A multilateral trading facility (MTF) is a European Union regulatory term for a self-regulated financial trading venue. These are alternatives to the traditional stock exchanges where a market is made in securities, typically using electronic ...

, which in 2011 was acquired by BATS Global Markets * 2008: Chi-X Global, operator of Chi-X Australia, Chi-X Canada and Chi-X Japan; in 2015, Nasdaq announced acquisition of Chi-X Canada from Chi-X Global; in 2016 Chi-X Australia, Chi-X Japan and Chi-Tech was acquired by J.C. Flowers. * 2017: Instinet announces acquisition of Blockcross, State Street's US-equity

dark pool In finance, a dark pool (also black pool) is a private forum ( alternative trading system or ATS) for trading securities, derivatives, and other financial instruments.Instinet Incorporated
American companies established in 1969 Financial services companies established in 1969 1969 establishments in New York City 2001 initial public offerings 2007 mergers and acquisitions Computer networking Stock market Nomura Holdings Financial services companies based in New York City American subsidiaries of foreign companies fa:سیستم شبکه مؤسسات