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Non-Tech : Instinet Group, Inc. (INET) -- Ignore unavailable to you. Want to Upgrade?

To: Axxel who wrote (40)	4/15/2005 12:07:38 AM
From: Glenn Petersen	Respond to of 46

Nasdaq Said to Be in Talks to Buy Instinet By JENNY ANDERSON and ANDREW ROSS SORKIN Published: April 15, 2005 Nasdaq Stock Market Inc., the largest electronic market place, is in exclusive talks to buy Instinet, the institutional brokerage and electronic trading network partly spun off by the Reuters Group in 2001, people briefed on the talks said yesterday. Instinet has been for sale since November. While it had been expected that the company, which has both an electronic trading network and an institutional brokerage business, would be sold in two parts, Nasdaq is in talks to buy the entire business for about $2.5 billion, the people briefed on the negotiations said. It is unclear what Nasdaq would do with the institutional brokerage business. A combination of the two companies would alter the arcane and highly competitive electronic trading landscape. Currently there are three major electronic venues for institutions and retail investors to trade stocks and options: Nasdaq, Instinet and ArcaEx, the Archipelago Exchange. The combination of the two would likely force ArcaEx into a deal as well as posing a more substantive threat to the New York Stock Exchange, which is moving toward a hybrid combination of electronic and floor-based trading. An Instinet spokesman declined to comment as did a Nasdaq spokeswoman. Shares of Instinet slipped 4 cents, to $5.77 on Nasdaq yesterday. Reuters owns 63 percent of the company. Markets like the New York Stock Exchange and Nasdaq fight to be the place where investors trade. They make money from listing stocks, from executing trades and from distributing market data. As the cost of trading equities has fallen, exchanges have become more dependent on volume and other financial products like futures and derivatives to remain profitable. Reuters is interested in selling the entire business rather than dividing the electronic market and the brokerage arm because that would generate a large tax bill. If Nasdaq wins Instinet, it could spin off the brokerage business. The Securities and Exchange Commission recently changed the rules governing the trading of stocks. The new rules favor electronic trading by requiring that all trades be executed at the exchange posting the best price. Electronic markets allow traders to access that price and execute a trade more quickly. As the N.Y.S.E. becomes more electronic, the electronic trading venues want to be able to trade more of the Big Board's prestigious listing of stocks. The N.Y.S.E. controls about 80 percent of the listed business. According to Nasdaq's Web site, it trades about 56 percent of its own listed shares. Competition among electronic trading networks has heated up recently. In September, Nasdaq closed a deal to buy Brut and its Brut ECN for $190 million from SunGard Data Systems. In January, Archipelago Holding, owner of ArcaEx, spent $50 million to buy the Pacific Exchange. nytimes.com