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February 1, 2005

Are Instinet and NYSE Ready to Tie the Knot?

By Gregory Bresiger

Could the Big Board get into the Instinet hunt?

It's not clear that the New York Stock Exchange is looking in the direction of its aggressive competitor. However, an official of Instinet says he thinks the Big Board is seeking a partner. "It wouldn't surprise me," says Michael Plunkett, president of North America for Instinet. Plunkett didn't say the NYSE and Instinet would ever become partners as some have speculated.

Plunkett is a critic of the NYSE's hybrid proposal. However, he says the Big Board could be forced into an alliance with one or more of the electronic exchanges that are pushing it. "I do think whether this change happens at a rapid pace or at a phased in approach, the end result will be the same. And we will see electronic trading increasing on the listed side. My guess is it [the NYSE] is looking at all these options so an alliance wouldn't be a shock."

Plunkett also says that the NYSE's hybrid plan "doesn't go far enough." He says that the Big Board has resisted many electronic changes in the marketplace because it is trying to protect its franchise. But there are questions over what will happen to Instinet.

Instinet parent Reuters has had the trading giant on and off the block for several years. Several potential buyers have been mentioned, including Archipelago Holdings.