Instinet Announces Price Reductions for US Equity Trading; Open
Technology, More Functionality, Increased Speed,
and now Lower Prices
Business Editors
NEW YORK--(BUSINESS WIRE)--March 12, 2002--Instinet (Nasdaq:INET),
through affiliates, the largest global electronic agency securities
broker, today announced that it is changing its price schedule for
U.S. broker-dealers, effective today.
The Company is reducing the average rates paid by broker-dealers
trading Nasdaq equities by at least 60% and simplifying its rate
schedule. Instinet is also moving to compete much more aggressively
for market share in Exchange Traded Funds (ETFs). These decisive
actions add to the significant moves already undertaken by the Company
to bolster Instinet's liquidity pool.
Of the reduced prices for Instinet's US broker-dealer clients,
Douglas Akin, President and CEO of Instinet, said, "Virtually every
brokerage firm in the industry has multiple issues with which they
must contend in today's economic climate and market environment. As a
result, price has asserted itself as a significant concern for
broker-dealers. We believe that our recent technology enhancements and
developments, including speed and pricing adjustments, go a long way
in addressing the needs of broker-dealer clients using our ECN
capability."
Instinet has increased the rebate for broker-dealers that provide
liquidity to $0.002 per share from $.0005 per share, a 300% increase.
The charge for taking liquidity remains at $0.003 per share. With
these new rates, the cost for a customer who provides and takes
liquidity in equal amounts will now be only $0.0005 cents per share,
or 50 cents per 1,000 shares. Instinet believes this will represent a
powerful incentive for Nasdaq market makers and other broker-dealers
who use Instinet to trade US Nasdaq stocks.
The Company has also greatly simplified its broker-dealer price
schedule, reducing to two the number of volume breakpoints. Going
forward, all broker-dealers that execute at least 500,000 shares per
month will qualify for Instinet's new, low rates on their trading
volumes in Nasdaq-listed stocks. In addition, for trades in ETFs,
Instinet is increasing the rebate for providing liquidity to $0.15 per
share and dropping the charge for taking liquidity to $0.19 cents per
share. In ETFs, therefore, the cost for a customer who provides and
takes liquidity in equal amounts will now be only $0.0004 cents per
share, or 40 cents per 1,000 shares.
"We chose this pricing scheme plan because of its balance," said
Jean-Marc Bouhelier, Executive Vice President of Instinet. "In the
current market environment, the risk-reward ratio is in tremendous
flux. Broker-dealers, in particular, have met with tremendous
competitive and financial challenges in a world of decimalization, and
yet they must meet the obligations of their industry roles as the
traditional providers of market liquidity. We believe our new pricing
schedule coupled with our new technology will offer broker-dealers the
value they expect and deserve from Instinet."
Other recent developments at Instinet include a more open
technology platform, which leverages the Company's FIX connectivity
solutions and dramatically increases the speed of Instinet's trading
systems. In the past few months, Instinet has also released enhanced
functionality for market access and has added features to improve
block-trading performance. These initiatives are indicative of
Instinet's dedication to supplying innovative technology solutions,
which are geared towards improving execution performance and reducing
transaction costs for all clients.
"As part of Instinet's strategy of customizing its offering to
meet the needs of its global client base, Instinet is also in the
process of delivering connectivity to vendors, aggregators and other
market participants, allowing them to access Instinet's liquidity,"
said Bouhelier.
Atkin further noted, "One of Instinet's operational aptitudes is
the analysis and study of transactions and the cost of trading. This
ensures that we offer the best possible executions at the lowest
possible costs to both our buyside and broker-dealer clients. For
market professionals, Instinet delivers premium execution quality by
providing access to significant buyside liquidity and through lower
operational costs achieved by average trade sizes far larger than the
industry average. For buyside clients, while commissions are clearly a
component of transaction costs, they have always been dwarfed by
market impact and opportunity costs, which have the largest impact on
total execution quality and overall performance."
Instinet's ability to offer the opportunity for best execution and
lowest total transaction costs has been well recognized by independent
industry studies. According to recent independent studies, Instinet is
a provider of premium execution quality. In a report published in
January 2002 based on data for the 12 months ended September 30, 2001,
Plexus Group ranked Instinet first in execution quality in
Nasdaq-listed stocks when compared to a universe of the 12 most-active
full-service brokers for which Plexus has data. Instinet also tied for
first in execution quality in exchange-listed stocks when compared to
the same universe. The most recent Abel/Noser Trading Report,
published in December 2001 and based on data from the third quarter of
2001, calculated that on average the total cost for Nasdaq-listed
stocks executed through Instinet was 7.45 cents per share lower than
the average for the universe of brokers for which Abel/Noser has data,
and for exchange-listed stocks was 3.96 cents per share better than
the Abel/Noser universe average.
As a result of the recent technology enhancements and the pricing
adjustments announced today, the Company intends to continue to grow
its business by maintaining and expanding its Nasdaq liquidity pool
while extending its global brokerage offering.
About Instinet
Instinet, through affiliates, is the largest global electronic
agency securities broker and has been providing investors with
electronic trading solutions for more than 30 years. Our services
enable buyers and sellers worldwide to trade securities directly and
anonymously with each other, have the opportunity to gain price
improvement for their trades and lower their overall trading costs.
Through our electronic platforms, our customers also can access over
40 securities markets throughout the world, including Nasdaq, the NYSE
and stock exchanges in Frankfurt, Hong Kong, London, Paris, Sydney,
Tokyo, Toronto and Zurich. We also provide our customers with access
to research generated by us and by third parties, as well as various
informational and decision-making tools. We act solely as an agent for
our customers and do not trade securities for our own account or
maintain inventories of securities for sale. For more information,
please go to www.instinet.com.
This press release is for information purposes only and is not
intended as an offer or solicitation with respect to the purchase or
sale of any security.
(c) 2002 Instinet Corporation and its affiliated companies. All
rights reserved. Member NASD/SIPC. INSTINET and the INSTINET Mark are
service marks in the United States and in other countries throughout
the world. Plexus Group is a wholly-owned, independent evaluator of
institutional trading costs. Neither Plexus Group nor Abel/Noser is an
affiliate of Instinet Corporation.
This news release may be deemed to include forward-looking
statements relating to Instinet. Certain important factors that could
cause actual results to differ materially from those disclosed in such
forward-looking statements are described in Instinet's prospectus
contained in its registration statement on Form S-1, filed with the
SEC on May 17, 2001, under the heading `Risk Factors', and other
documents filed with the SEC and available on the Company's web site.
Certain information regarding Nasdaq trading volumes is also included
in the registration statement and on the Company's web site.
Source: Plexus Group BrokerEDGE Monitor TM, Nasdaq Listed Peer
Group Comparison. Published January 2002. Period covered: Fourth
Quarter 2000 - Third Quarter 2001. Plexus calculates execution quality
by comparing actual execution cost to expected execution cost and
expresses the result as "Value Added." Expected Execution Costs
include Commissions plus the Trade Impact Benchmark; Actual Execution
Costs include Commissions plus Trade Impact Cost. Execution Quality
Value Added, Commissions, Trade Impact Benchmarks and Trade Impact
Costs are calculated by Plexus. The brokers referenced comprise the
Full Service Peer Group, and are twelve of the most active for whom
data is available from the Plexus Broker Universe.
Source: Abel/Noser Trading Report, published December 2001 and
based on data from the third quarter of 2001, ending 9/30/01.
Abel/Noser measures transaction costs for US equities by comparing
execution prices to the volume-weighted average price (VIWAP) on the
date the trade occurred. It then creates transaction cost averages for
Listed and Nasdaq stocks by aggregating the trading activity data
provided by its Plan Sponsor clients. |
