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Banking

Electronic brokerage: Nomura gets Instinet access

Rivals wish the Japanese investment bank all the worst.

This November Nomura beat numerous rivals, believed to have included many of the biggest names on the street, for control of Instinet, the pioneering electronic agency brokerage.

Although the terms of the deal were not disclosed, there is widespread speculation that the Japanese investment bank might have paid almost $1.2 billion.

The deal plugs a significant gap in Nomura’s business. “Execution is an increasingly important factor in our business,” says Naoyuki Oguri, deputy managing director of global markets planning at Nomura in Tokyo. “We believe that the trend towards unbundling and the rise of stat arb hedge funds will continue, so it is very important for brokers to enhance their execution capabilities. Instinet is a global agency broker with an advanced electronic trading platform and strong relationships with a client base that complements ours. We also believe that there may be substantial potential for synergies.”

According to financial services consultants Aité Group, Instinet, which trades an estimated 190 million shares a day in the US alone, will give Nomura access to advanced algorithms and crossing technology, and an increased presence in 53 markets in 30 countries.

Instinet’s front ends sit on the desktops of more than 1,500 clients worldwide and the broker also has advanced pre-trade analytics and real-time transaction cost tools.

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