Why Instinet and the ECNs are under threat.

Financial News, May, 2002

Byline: Peter Wilson-Smith

Is there a long-term future in the securities market for ECNs such as Instinet and Island? It is a question much preoccupying Tom Glocer, chief executive of Reuters, the financial information giant which owns 83% of Instinet. Since it was floated only last summer, Instinet's stock price has tumbled as the once high-growth business has gone into alarming decline. The combination of falling trading volumes on Nasdaq and price cutting by competitors has savaged revenues, pushing the business into loss. Instinet's market share has fallen below Island and the launch of Nasdaq's SuperMontage electronic trading platform this summer poses an additional threat.

For Glocer, in the throes of pushing through a radical programme of...

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