Instinet Inc., a global agency broker, last month closed its first quarter as a private firm with the highest U.S. and international institutional volumes in its history.
In addition to dramatically increasing the upstairs liquidity it offers to its worldwide clients, Instinet introduced several new trading technologies, enhanced its BrokerShare program, announced a new European ATS and received top execution rankings from three leading independent evaluation firms.
"Instinet is benefiting from the return to its historic roots as a private company and its position as the premier global institutional agency brokerage," said Ed Nicoll, Instinet CEO. "When our deal with Nasdaq closed last December, we told our global institutional customers that we would focus on three things - continuing to help them achieve best execution, delivering top-notch trading technologies and providing the best possible access to the international markets. We feel we've made significant strides in each of those areas, but realize that with a client base that includes some of the most sophisticated buy-side clients in the world, we must never stop delivering value in order to earn their business."
Global Q1 Highlights
U.S. Volume Increases to 133 Million Shares: Instinet increased its average daily U.S. trade volume (ADV) to 133 million shares, which represents 2.8 percent of the total U.S. equity markets volume and an increase of 20 percent over Q1 2005. The firm also saw a significant increase in business from its trading algorithms and crossing products, particularly the pre-market VWAP Cross, which executed more than 40 million shares on several occasions during the quarter. Alex Goor, Instinet Co-President, commented: "As a pure agency broker, we are seeing a tremendous response from our customers to our ability to offer both the execution tools and upstairs liquidity needed to achieve best execution."
European Consideration Traded Up 47 Percent: Instinet increased its average daily consideration traded in Europe to $885 million (USD) in Q1 2006. This represented a growth of 47 percent over Q1 2005, as Instinet outgrew the market with its European market share increasing by 10 percent.
Asian Consideration Traded More than Doubles, Increasing by 115 Percent: Instinet continued its extremely strong growth in Asia, benefiting from its local presence in Tokyo, where it is a full member of the Tokyo Stock Exchange, and in Hong Kong, where it is a full member of the Hong Kong Stock Exchange. Instinet's daily consideration traded in Asia for the quarter increased to $574 million (USD), a 115 percent jump from Q1 2005. The surge remains fueled by the firm's success in Japan, where in Q1 Instinet traded 1.9 percent of the Tokyo Stock Exchange's total volume. Also contributing to the upswing was JapanCross, Instinet's off-exchange crossing network.
"In many ways, Instinet is the only truly global agency broker," said John F. Fay, Instinet Co-President and head of its international business. "Our global platform offers customers the most sophisticated trading technology available plus access to experienced sales traders located in each of the world's eight largest equities markets. In addition to the global trends driving growth in international markets, there is a secular trend in Europe and Asia towards unbundling and electronic trading. Our value proposition places us squarely at the intersection of these trends."
Top Execution Rankings from Three Separate Firms:
In January, ITG's Plexus BrokerEDGE Monitor ranked Instinet number one in execution quality for block-trading (10,000 - 50,000 shares) in both exchange-listed and Nasdaq-listed stocks, its eighth consecutive quarterly report to do so.
Institutional Investor ranked Instinet as the leading agency broker in its survey of global transaction costs, based on Elkins/McSherry research.
In January, research firm Celent named Instinet the best execution venue for Nasdaq-listed stocks in its "Execution Quality in the U.S. Equities Markets" report. The study on which the report was based encompassed over 190 participants and more than four billion orders from the top 25 venues.
BrokerShare Adds 200th Broker-Dealer: In the first quarter, the firm added the 200th broker-dealer to its U.S. BrokerShare program, which has also been enhanced in advance of anticipated SEC changes to Section 28(e) of the Securities Exchange Act of 1934. With BrokerShare, Instinet's clients in the U.S., Europe and Asia can unbundle their transactions by trading through
Instinet but directing commission dollars to any broker-dealer enrolled in the program. Clients continue to receive the broker's research without affecting best execution goals.
New Global Trading Technologies Well Received
In March, Instinet added international market access to Instinet Trading Portal, a global front end for block and active traders. The new version supports advanced order types and market depth for over 40 global markets in 27 countries, including worldwide exchanges, ECNs and Instinet's proprietary upstairs liquidity.
In February, Instinet unveiled Cobra, a stealth order-management algorithm. Instinet now offers eight algorithms that are able to trade on an agency basis in 25 markets globally.
European ATS Announced: In Europe, Instinet announced plans to launch Instinet Chi-X, an ultra-low cost, pan-European ATS. The company believes that Chi-X will offer compelling value in price, speed and execution quality particularly in light of the potential trend of consolidation of exchanges in Europe.