Instinet

Based in New York, Instinet is an electronic communication network (ECN) that is also referred to as an "alternative trading system." It is in charge of trading that occurs outside of the stock exchanges. It is the largest and the oldest communications network and is owned by Nomura Holdings, but it was first owned by Reuters and then NASDAQ purchased the communication network from them in 2006.

Reuters acquired Instinet in 1987 and was once located in the World Trade Center's North Tower on the 13th floor. [1] Although Instinet is the oldest electronic communication network, it didn't go public until 2001. Following this was the 2006 NASDAQ purchase, which didn't last long because Nomura purchased the network in 2007.

What Instinet Does

The primary function of Instinet is for buyers and sellers to display their bid and offer quotes on stocks. By using brokers, these buyers and sellers are able to perform transactions. Not only is Instinet a communication network, but it is a worldwide securities broker and works in 40 global markets, enabling more than 1,500 institutional customers to make trades.

The main goal of Instinet is to aid institutions in improving their global performance and lower execution cost by offering and utilizing trading products that are electronically-based. Many brokers and advisors use Instinet because of the transaction analysis, sales trading, and other services that are offered to make the investment process run smoother for all who are involved.

Instinet is also traded on the NASDAQ exchange under the symbol INET. [1] Oddly enough, Instinet, in addition to other electronic communication networks have become threats to the stock exchanges like AMEX that have been established for quite some time. They are rapidly changing the way in which trading is done after almost 200 years of the process hardly changing.

Awards and Changes

Instinet has also won a number of awards since its inception in 1969. Amongst those awards are Best Execution-Only Broker, Best Broker Supplied Tool/Technology, and No. 1 for Execution Quality. There are more awards than this and they have been awarded between 2008 and 2009 for a job well done and shows how quickly changes are taking place that are pushing ECNs to the top of the market.

Instinet has been taking steps to be quite the threat on Wall Street, but it is only necessary due to the high degrees of competition that is occurring between the different ECNs. They are changing the way in which the world of trading is behaving. Investor behavior is altered due to the Internet and the market has had to adapt to all of this.

Where the way in which stocks were traded stayed the same for so long, the changes have been rather rapid. Eventually, and it is being predicted, all of the aspects of the market are going to have to adjust to the digital age. Streamlined systems will need to be stress-tested because the velocity of trading will increase. Instinet and other ECNs have established how the online world can increase the speed and demand of trading, as well as the fluctuations that occur in stock prices.

If you are wondering if Instinet is the right trading option for you, talk to a certified financial advisor who can educate you on whether or not Instinet is the route that you need to take to execute your trades. Every entity is different with different tools, functions, and other conveniences. If Instinet has what you need, then you may choose this electronic method of trading. If not, there may be another method. Your certified financial advisor can evaluate the situation and tell you what they think.

[1] http://www.investopedia.com/terms/i/instinet.asp 06/07/10'

[2] http://www.investopedia.com/articles/06/globalelectronicmarket.asp 06/07/10

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