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July 31, 2003

Instinet Splits Into Buyside and Sellside

By Staff Reports

The ECN and institutional business at Instinet will now have separate sides, catering separately to buyside and sellside customers.

That follows the decision of Instinet to create separate corporate structures for both sides, which officials expect to become profit centers.

Instinet has been run by two management teams, which report to Instinet CEO Ed Nicoll, each handling both areas of the business. However, under the new corporate structure, Instinet officials said, there will be a clearer strategic direction as Instinet more fully integrates the Island ECN. The latter has traditionally catered to day traders. Both ATSs combined account for about 27 percent of Nasdaq share volume. Instinet, historically regarded as an institutional agency brokerage, now plans to also stress direct access services and sales expertise on the broker dealer side.

Instinet faces a challenge from ArcaEx, which handles a reported 15 percent of Nasdaq volume. The Instinet separation would allow it to spin off some assets.