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Instinet to Enter Retail Brokerage Market

Instinet Corp., the largest agency broker in the world, will soon open its doors to individual investors for the first time, InternetNews.com has learned.

Founded in 1969 and acquired by Reuters Group PLC in 1987, Instinet has -- until now -- been accessible only to professional trading firms and financial institutions.

"Our parent company, Reuters, has indicated that we will be launching our retail arm in the fourth quarter this year," said Silvia Davi, spokesperson at Instinet. "Instinet will be looking to offer all the benefits we've been offering our institutional base for the past 30 years to retail investors."

Davi explained that the move is part of Instinet's ongoing strategy to expand its business into new customer groups.

As one of its first steps into the retail investment market, Instinet struck a deal with Yahoo! Inc. Wednesday to provide trade data on Yahoo! Finance.

Under the agreement, individual investors using Yahoo! Finance will have access to trading activity on Instinet during market hours and will be able to view the best-priced orders in Instinet in real time. Information on volume information and last sale for stocks will also be available.

"Instinet was founded on the principle that institutional investors needed a way to trade that delivered deep visibility into the market, the ability to keep their trading strategies anonymous, and freedom from worry that the broker executing their trades might be trading against them rather than acting on their behalf," said Barbara Goodstein, chief executive officer of Instinet.com. "As we will soon be entering the retail business by offering direct trading via Instinet to individual investors through Instinet.com, it's appropriate that we provide self-directed investors and the marketplace with the same kind of powerful information we historically have provided our institutional clients."

The company said it trades more than 400 million shares per day on average. It describes itself as a "pure agency" because it maintains a neutral position in all transactions.

"...Instinet does not compete with client trading strategies," the company said. "Rather, Instinet offers its clients the most liquid, efficient execution possible, protecting them from market impact and opportunity costs by ensuring their strategy, profile, and identity remain anonymous."

The company said distribution will be phased in over the course of the next six months. Some of the content will include Instinet top of book, last sale, most actives and full book.

The Yahoo! agreement will probably not be the last deal Instinet makes in the near future. John Oddie, chief executive officer of Instinet's Global Equities Business, said the company is actively searching for partners.

"Instinet has made a business decision to disseminate its market data to a broad audience and make it available to the marketplace," Oddie said. "In addition to today's announcement...we are proactively forging relationships with portals, e-publishers and information providers who will publish our trading data via a variety of distribution channels in order to give all investors insight into market activity, trading patterns, and best price executions."

Instinet has already begun a pilot program -- featuring summaries of pre-market and post-market trading on Instinet -- with TheStreet.com.

Earlier this year, Instinet tried to buy its way into the retail market through a merger with Datek Online. That deal fell apart over antitrust concerns.