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Capital Markets

Instinet To Launch Derivatives Trading

This article appears courtesy of Institutional Investor

Source: Wall Street Letter

Veronica Belitski


Instinet , the institutional brokerage, will launch options and futures trading on its equity platform within the next two quarters. "Instinet will either partner with another brokerage or build in functionality ourselves," said Mike Plunkett , president. "If we were to partner it will be with an established options player," he added, declining to comment on the status of negotiations. The move would add significant volumes for the brokerage, analysts said. "We are trying to resolve work flow issues for the buy-side. Accounts become a little more sticky when clients can do equity and options trading on one platform," Plunkett added. Exchanges and brokerages are all vying for a piece of the derivative market's trading as volumes have skyrocketed.

Instinet has historically focused on equity trading, so a partnership would add options expertise. The problem is that only about a third of options volume is done electronically and there are few firms that actually have strong electronic options trading platforms. "The challenge will be finding a firm whose technology is competitive," said Damon Kovelsky , analyst with Financial Insights .


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