Instinet kauft Island: Konkurrenz für Nasdaq ! - 500 Beiträge pro Seite

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06:00 10Jun2002 DJN-WSJ: INSTINET NEAR DEAL TO BUY ISLAND ECN -SOURCES<RTR.L><RTRSY.O>
06:00 10Jun2002 DJN-WSJ(6/10):Instinet/Island -2eal Seen About $500M In Stk<RTR.L><RTRSY.O>

WSJ(6/10):Instinet/Island -2eal Seen About $500M In Stk<RTR.L><RTRSY.O>
By Kate Kelly And Robert Frank
NEW YORK (Dow Jones)--In a combination that could create an important new rival to the Nasdaq Stock Market, two of the world`s largest electronic-trading firms are close to an agreement to merge.
Instinet Group Inc. (INET), a publicly traded unit of British media giant Reuters PLC (RTRSY), is expected to announce as early as today that it is buying its fast-growing rival, Island ECN (X.ISD), for about $500 million in stock, people familiar with the matter said.
The merger would combine Nasdaq`s two biggest electronic-trading rivals at a time Nasdaq is making a major new push to reclaim some of the business it lost during the boom.
Island and Instinet together control about 22% of the trading of Nasdaq-listed companies. While Instinet`s share volumes for all equities in the first quarter were flat when compared with the market`s peak in early 2000, at 15 billion shares traded, Island`s volumes have more than doubled during that period, to 28 billion.
In hopes of winning back some of that business, and to avoid losing transaction fees that account for nearly half of its revenue, Nasdaq next month will roll out a new version of its trading-software system. The revamp, called SuperMontage, is aimed squarely at the traders who in recent years have left Nasdaq for electronic networks such as Island and Instinet, which are computerized platforms that allow people to buy and sell stock without going directly to a stock market such as Nasdaq or the New York Stock Exchange.
With the new Nasdaq system imminent and the two biggest electronic-communications networks, or ECNs, combining, analysts predict further consolidation in an industry that ballooned during the stock-trading boom of the late 1990s but has since struggled.
"SuperMontage poses a significant threat in my view to ECNs," said Rich Repetto, an analyst who covers trading firms for Putnam Lovell Securities. However, he said that if the Island and Instinet merger is completed, "Then I think SuperMontage could be challenged."
Though some elements of the final agreement still are being worked out, the merger would seem to be an important step forward for Island, a relative upstart with a tenth of Instinet`s staff.
The merger marks an critical step forward for Island, a relative upstart with one-tenth of Instinet`s staff. It is also important for Reuters, which owns 83% of Instinet and which has been struggling to find a strategy for the company. Reuters shareholders will receive a cash windfall from the deal as well as a majority stake in a much stronger industry player.
Under terms being discussed, Instinet will issue stock valued at about $500 million. In addition, because Instinet has about $800 million in cash on its balance sheet, the company will issue a special dividend of about $1 per share to current Instinet shareholders for a total of about $250 million.
Island`s current chairman, Ed Nicoll, will serve as chief executive, and Island`s CEO, Matt Andresen, will head the stock-trading operation.
Instinet`s acting CEO, Mark Nienstedt, and Instinet`s chief operating officer, Jean-Marc Bouhelier, will also have executive roles at the company.
Lehman Bros. (LEH)served as financial adviser for Instinet, while Morgan Stanley (MWD) advised Reuters and Credit Suisse First Boston (Z.CSF) advised Island.
In November, Island`s market share in Nasdaq trading surpassed Instinet`s for the first time. Shortly thereafter, Island also beat out the American Stock Exchange in its trading of a popular exchange-traded fund called the QQQ.
Those milestones are particularly notable considering that Island was founded only five years ago, the result of new Securities and Exchange Commission rules that gave small investors the same access to stock orders that professional investors had at the time.
The result was a spate of new ECNs, including Island, formed in hopes of siphoning off part of Nasdaq`s business.
Using a set of 200 personal computers stacked on baker`s racks in an office in lower Manhattan, Island initially had a simple mantra: figure out how to make traders more money and win their loyalty in return. To that end, Mr. Andresen consistently kept Island`s user fees lower than those of his competitors, and gave traders plenty of massaging when the occasional problem arose.
"They have a great, customer-oriented kind of mentality," said Steve Swanson, who runs Automated Trading Desk, a proprietary-trading firm in Charleston, S.C. He said that the last time Island`s trading systems failed for more than a few minutes, a scenario that occurs frequently at most ECNs, "they broadcast an e-mail to everybody saying how sorry they were that it occurred, and that they were taking steps to address the problem. I love how seriously they take themselves."
By the late 1990s, Island had a lock on the electronic day-trading community, which included customers such as Mr. Swanson as well as individual investors who traded from home. To broaden its business among bigger investors and Wall Street firms, Mr. Andresen again lowered user fees, dropping them to just slightly less than what Nasdaq was charging.
Island`s success, which culminated in its passing of Instinet as the market leader, was mirrored by turmoil at its much bigger rival. With its volumes under pressure and its stock price tumbling, Instinet this spring once again returned to the prospect of a merger with Island.
People familiar with the discussions said Doug Atkin, who was chief executive of Instinet until recently, had long been interested in tapping Island`s solid technology and growing share of Nasdaq trading to form a bigger and better Nasdaq rival.
But these people say Mr. Atkin`s superiors at Reuters, which owned 83% of Instinet and controls its board, were less enthusiastic. Ironically, it wasn`t until Mr. Atkin left under pressure from the board in April that Instinet`s discussions with Island gained momentum.
Founded in 1969 as a system for trading Big Board-listed stocks, Instinet - whose name was a shorthand version of the term "institutional network" - had spent nearly three decades dominating the business of trading away from the official stock markets.
It was also the premier destination for institutional traders such as large mutual funds. Mr. Atkin set about expanding Instinet, setting up a bond-trading arm and an independent-research department, and making deals with far-flung stock exchanges to give customers 24-hour access to world markets.
But in the midst of those initiatives, say people close to the company, Instinet neglected its core business of providing cheap, efficient stock-trading technology - an oversight that eventually allowed Island to eclipse the one-time leader.
Jay Weinstein, who runs a small investment-advisory firm in Bethesda, Md., canceled his Instinet service last summer because the company increased its trading fees to a level he couldn`t afford. "I`ve had my own firm for six years and I generated $20,000 a year in commissions for them," he said, "but I had to give up the system."
Since Mr. Atkin`s departure in April, Instinet under Reuters has been at work retooling itself - in part to become more like Island. Instinet technicians began tweaking the firm`s trading systems, shifting away from proprietary Instinet terminals to create Web-based trading sites similar to Island`s. And, like Island, Instinet slashed its user fees.
(END) Dow Jones Newswires

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Monday, 10 June 2002 06:00:48
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[MangoJo]

seltsam
zuletzt wollte Island noch Instinet übernehmen
auch für 500 Mio $

@kammler
und wie gehts nun weiter