Instinet to join Nasdaq's trading system
Mon Nov 3, 7:26 PM ET
By Elizabeth Wine and Vincent Boland in New York
Instinet, the electronic stock trading marketplace, is to join the SuperMontage trading system, providing a big boost to the fortunes of the Nasdaq stock market, which rolled out the system last year in the teeth of some investor scepticism.
Instinet, which bought the Island trading system and replacing its two systems with a new market called INET, said it would display its orders on SuperMontage in January, which analysts said would allow Nasdaq to claim significantly higher order flow for its trading system - a key competitive advantage.
Instinet decided to join after Nasdaq agreed to change some rules that gave its own market-making firms greater priority in the display of prices for Nasdaq-listed stocks. after its consolidation is complete. SuperMontage will use Instinet's routing technology to send orders to all electronic trading platforms.
Alex Goor, head of alternative trading systems for Instinet, said joining SuperMontage would give its customers access to more liquidity. Chris Concannon, executive vice president of Nasdaq, said the move would provide investors with an enhanced opportunity for best execution.
Instinet claims to be the world's largest electronic stock market. It has a 25 per cent share of the total daily trading volume of Nasdaq-listed stocks. Analysts said the combination of SuperMontage and Instinet would also allow Nasdaq to add its partner's share to its own, giving it a 42 per cent share of trading volume.
Analysts said this would be an important claim for Nasdaq to make, given that liquidity attracts more liquidity as investors search for the deepest trading pool. "The bragging rights associated with that statement can't be underestimated," said Jodi Burns, an exchanges analyst at Celent Communications. |
