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Friday, 18 May, 2001, 12:02 GMT 13:02 UK
Instinet float beats expectations
Instinet logo
Instinet is the largest electronic communication network on Wall Street
The stockmarket flotation of Reuters' electronic stock trading network Instinet has raised much more money than even the most optimistic analysts had predicted.

Man by computer
Electronic trading platforms are popular with many investors
In the first stock offering of an alternative trading network, Instinet was valued at about $3.3bn (2.3bn) when it made its debut on the US-based Nasdaq stockmarket, which specialises in technology companies.

Instinet's stockmarket flotation was widely watched by competing ECNs, or electronic communication networks, which match buyers and sellers of shares.

They see it as an indicator of how much money they would be able to raise if they were to "go public" as well.

Instinet sold a 14% stake for $464m, or $14.50 per share, well above the predicted range of $11.50 - $13.50 per share.

Weak market

Many high-tech companies have held back from floating their shares in recent months, with the number of initial public offerings or IPOs on Nasdaq slipping from 160 new launches during the first four months of 2000 year to just 30 this year.

"It's a well recognised company on the Street, and they' re a brand among the ECNs," said IPO Value Monitor analyst Christopher Schulz.

"That is why there is an especially good response. It seems well timed."

By volume, Instinet accounted for 15% of the shares that were trade on the Nasdaq stock exchange during the first quarter.

This makes it the largest ECN on Wall Street.

The high trading volumes lifted its revenues 24% to $431m for the first quarter.

Exchanges fight back

When the ECNs first emerged as competitors to traditional stock exchanges, many observers predicted that their anonymity and lower prices would make them into clear winners.

Initially, they won much business from the world's major stock markets.

But the response was swift as the leading exchanges clawed back business by offering better liquidity and improving their own technology.

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See also:

11 Jun 99 | The Company File
Wall Street giants challenge exchanges
30 Jul 99 | The Economy
Nasdaq to go public
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