Instinet
| Company type | Subsidiary |
|---|---|
| Industry | Financial services, Electronic trading |
| Predecessor | Institutional Networks Corp. |
| Founded | 1969 |
| Founder | Jerome M. Pustilnik, Herbert R. Behrens |
| Headquarters | New York City , United States |
Area served | Global (excluding Japan) |
Key people | Ralston Roberts (CEO) |
| Products | Sales trading, Newport EMS, algorithmic trading tools, trade cost analysis, commission management, independent research, access to dark pools |
| Owner | Nomura Group |
| Parent | Nomura Group |
| Website | www |
Instinet Incorporated operates as an institutional, agency-model broker and functions as the independent equity trading division of its parent company, Nomura Group. Headquartered in New York City, Instinet caters to a clientele that includes asset management firms, hedge funds, insurance providers, mutual funds, and pension funds. Its offerings encompass sales trading services alongside advanced trading technologies such as the Newport EMS, algorithmic trading tools, trade cost analysis, commission management solutions, independent research, and access to dark pools.
During the 1980s and 1990s, Instinet was a pioneer in off-exchange trading alternatives through its "green screen" terminals and played a foundational role in creating electronic communication networks like Chi-X Europe and Chi-X Global. Research conducted by Markit positioned Instinet as the third-largest broker for cash equities in Europe in 2015.
Founding and early development
Established in 1969 by Jerome M. Pustilnik and Herbert R. Behrens under the name Institutional Networks Corp., Instinet was designed to challenge the New York Stock Exchange by connecting major institutional investors directly via computer networks to facilitate anonymous equity transactions.
The company’s expansion during the 1970s was modest until 1983 when William A. "Bill" Lupien, formerly a specialist at the Pacific Stock Exchange, assumed leadership. Lupien redirected the company’s strategy toward aggressively promoting Instinet’s platform to both brokers and buy-side participants. He brought on Fredric W. Rittereiser as president and COO and appointed David N. Rosensaft as vice president of New Products Development. Rittereiser eventually became CEO of First Jersey before Joseph Taussig succeeded him as COO. Their tenure introduced significant innovations that firmly positioned Instinet as an essential resource for traders on both sides of the market.
Acquisition by Reuters
Following Lupien’s strategic pivot, Instinet saw accelerated growth throughout the mid-1980s. Notably, during the 1987 market crash, its electronic trading system allowed operations to continue despite brokers being unreachable. Reuters, which had acquired a minority stake in 1985, completed a full acquisition of Instinet in May 1987 while preserving it as an autonomous subsidiary based in New York. Shortly after this transition, Lupien and COO Joseph resigned.
Regulatory changes and market evolution
Throughout the late 1980s and early 1990s under Reuters’ ownership, Instinet expanded its reach. By the late 1990s, driven by SEC regulations concerning Order Handling Rules and alternative trading systems (ATS), Instinet had broadened its global footprint under Douglas Atkin’s leadership, operating across more than 20 markets with revenues approaching $100 million by 1998. Despite maintaining a leading position as an electronic communication network (ECN), new entrants with innovative pricing models coupled with Instinet’s rapid growth and technology setbacks led to a decline in market share by the early 2000s. To counter these challenges, Instinet merged with Island ECN in 2002 and adopted Island’s technology platform, which was rebranded as Inet.
Transition to public company
In 2001, Reuters took Instinet public while retaining a majority ownership stake of 62%. Subsequently, in 2005 Nasdaq acquired Instinet, preserving the Inet ECN technology but divesting the agency brokerage segment to Silver Lake Partners.
Nomura acquisition
In February 2007, Nomura purchased Instinet from Silver Lake for roughly $1.2 billion. Instinet continues to function as an autonomous subsidiary, led by CEO Ralston Roberts. By May 2012, Nomura revealed its intention to consolidate U.S. electronic trading operations under Instinet, with the goal of positioning it as Nomura's primary electronic trading platform worldwide, except within Japan. In September 2012, Nomura officially designated Instinet as its execution services provider for all markets outside Japan.
Achievements
Instinet is widely acknowledged for its groundbreaking contributions to electronic trading and its sustained market influence. Notable milestones include:
- 1969: Introduction of one of the earliest electronic trading systems
- 1980: Launch of the first direct market access (DMA) platform
- 1986: Creation of the inaugural aftermarket crossing system
- 1993: Deployment of Instinet OMS, an early execution management system (EMS)
- 1999: Rollout of Instinet Helix, a platform for market routing
- 2007: Establishment of Chi-X Europe, the first significant European multilateral trading facility (later acquired by BATS Global Markets in 2011)
- 2008: Launch of Chi-X Global, managing Chi-X operations in Australia, Canada, and Japan; Nasdaq acquired Chi-X Canada in 2015; J.C. Flowers purchased Chi-X Australia and Japan in 2016
- 2017: Purchase of Blockcross, the U.S. equity dark pool operated by State Street
These accomplishments highlight Instinet’s strategic leadership and competitive edge in the realm of electronic trading.
External links
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- American companies established in 1969
- Financial services companies established in 1969
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- 2001 initial public offerings
- 2007 mergers and acquisitions
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- Nomura Holdings
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- American subsidiaries of foreign companies
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- Companies of the United States by year of establishment