Instinet has been a constant driver for change. Set up using teletype machines, the cutting-edge technology of the day, its goal was to facilitate trading between investors, cutting out the costs of middlemen. But the brokerage found it tough going for years, until in the early 1980s it saw an opportunity on the US exchange Nasdaq for a technologically advanced agency broker to cut costs for investors.
That business now accounts for 80% of its revenues but it is under severe pressure from largely retail-focused electronic commission networks [ECNs] that were born out of a loophole in Securities & Exchange Commission regulations in 1997 and have put pressure on Instinet's prices.
Instinet began to diversify in 1992, setting up operations in Europe and later on in Asia, spending nearly $100 million. After six years, only 20% of its revenues come from these businesses. And there are other issues. The equities trading technology is getting old, its prices still seen as high by many in the markets. And its link to parent Reuters is being called into question again.
Far from being mired in such problems, however, Instinet has come out fighting.