DEFINITION of 'Instinet'

Instinet is a global financial securities service that operates an electronic securities order matching (trading) and information system. The Instinet system allows members (primarily professional traders and investors) to display bids and offer quotes for stocks and to conduct transactions with each other. As a global securities broker, Instinet enables institutional customers to trade securities in global markets.

BREAKING DOWN 'Instinet'

Instinet is an institutional, agency-only broker that also serves as the independent equity trading arm of its parent, Nomura Group. It executes trades for asset management firms, hedge funds, insurance companies, mutual funds and pension funds. Headquartered in New York, the company provides sales trading services and trading technologies such as the Newport EMS, algorithms, trade cost analytics, commission management, independent research and dark pools of liquidity.

Instinet is best known as one of the first off-exchange trading alternatives, with its “green screen” terminals prevalent in the 1980s and 1990s, and, more recently, as the founder of Chi-X Europe and Chi-X Global.

According to industry research group Markit, in 2015 Instinet was the third-largest cash equities broker in Europe.

Founding of Instinet

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 by means of computer links between major institutions, such as banks, mutual funds, and insurance companies, with no delays or intervening specialists.

Instinet is Wall Street's oldest electronic communications network, and after it was acquired by Reuters Group in 1987, it and other electronic communications networks evolved into major threats to the established stock exchanges. The company split its electronic communications network and its brokerage business into Inet ECN and Instinet, respectively, in 2003. NASDAQ then acquired Inet ECN in 2005 and Instinet was sold to a private equity firm. In addition to sales trading, Instinet provides front-end technology, algorithmic trading, liquidity sourcing, independent research, commission management and transaction analysis.

Nomura Acquisition of Instinet

In February 2007, Nomura purchased the firm from private equity firm Silver Lake for a reported $1.2 billion. Instinet is today operated as an independent subsidiary of Nomura and run by CEO Fumiki Kondo. 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.

RELATED TERMS
  1. ECN Broker

    An ECN broker is a forex financial expert that uses electronic ...
  2. EDGX

    A high-volume trading platform owned by Direct Edge ECN LLC, ...
  3. Interbank Network for Electronic ...

    Interbank Network for Electronic Transfer (INET) processed Mastercard’s ...
  4. Alternative Trading System - ATS

    Alternative Trading System - ATS is a trading system that is ...
  5. Electronic Blue Sheet - EBS

    An electronic request for detailed information about trades sent ...
  6. Executing Broker

    An executing broker is a broker that processes a buy or sell ...
Related Articles
  1. Trading

    Market Makers Vs. Electronic Communications Networks

    Learn the pros and cons of trading forex through these two types of brokers.
  2. Insights

    Getting to Know the Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask.
  3. Trading

    Introduction to Level II Quotes

    Find out what's happening in a given stock with this service showing Nasdaq market makers' best bid and ask prices.
  4. Investing

    Analysts Positive on AVGO Ahead of the Quarter

    Loop Capital and Instinet are positive on Broadcom ahead of the quarter. Margins, cash flow and the new iPhone have a lot to do with that.
  5. Investing

    Tesla Sales to Beat $60B Within Decade: Nomura

    Nomura Instinet pegs Model 3 demand at 500K units per year, providing billions in cash flow.
  6. Trading

    The Death Of The Trading Floor

    Electronic trading has almost completely replaced face-to-face human trading.
  7. Trading

    Know Your Counterparty When Day Trading

    This can provide insight into how the market is likely to act based on your presence, orders and transactions.
  8. Investing

    Microsoft CEO, CFO Among Best Tech Execs: Instinet

    Instinet started coverage of Microsoft, saying investors underappreciate the stock.
  9. Trading

    Electronic Trading Tutorial

    Learn about the systems that run the market.
  10. Investing

    Amazon’s Apparel Biz to Hit $85B by 2020: Instinet

    Analysts say the e-commerce giant benefits from 'knowing its customers better than they do.'
RELATED FAQS
  1. Why are the bid and ask quotes usually so far away from each other in after-hours ...

    The low volumes typically traded through after-hours trading systems can create wide bid-ask spreads. Read Answer >>
  2. What is after-hours trading? Am I able to trade at this time?

    After-hours trading is the period of time after the market closes when an investor can trade outside of regular trading hours ... Read Answer >>
  3. How does the foreign exchange market trade 24 hours a day?

    Trading in the forex is not done at one central location, but is conducted by phone and electronic communication networks ... Read Answer >>
  4. Why don't stocks begin trading at the previous day's closing price?

    Between the closing bell and the next opening bell, a number of factors can affect the attractiveness of a particular stock ... Read Answer >>
  5. What is the electronics sector?

    Learn more about the electronics sector and the challenges and opportunities presented to electronics companies by new and ... Read Answer >>
  6. Quote driven and order driven markets: What's the difference?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
Hot Definitions
  1. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  2. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  3. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  4. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  5. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  6. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
Trading Center