Instinet Making Options Platform Acquisition (NMR)

Instinet is often thought of as one of the oldest electronic communications networks, or ECN’s, which traders have used for years for equities trading; but now it is effectively an agency broker.  It looks like Instinet’s platform is about to be expanded  into options with an acquisition.  This morning came an announcement that Instinet has agreed to acquire substantially all the business and assets of TORC Financial, LLC.  TORC is a provider of derivatives trading technologies.  Instinet noted that this will give immediate access to TORC’s suite of options-focused and ‘broker-agnostic solutions’ for institutional derivatives trading. As far as what the terms were, financial terms were not disclosed in the announcement.

The solutions include execution, analytics and risk management capabilities.  The company has noted that trading in derivatives is evolving in a manner very similar to the cash equity markets over the last decade
and that US options volume has grown by almost 20% each year since 1995.  The firm also pointed to a study from earlier this year showing that some 63% of options traders expected to increase their options volume in 2009.

TORC has a full suite of derivatives trading technologies, including TOP (TradeSpeed Options Professional), a multi-asset class application that offers integrated options analytics and execution capabilities and is integrated with most major US-based prime brokers.  Its other listed service is RiskPro, which allows for the real-time tracking of risk metrics across positions, accounts, groups, asset classes and trading desks.

Instinet currently offers a global network of agency-only brokers and offers the Chi-X® trading systems.  The company is now a wholly-owned subsidiary of Nomura Holdings, Inc. (NYSE: NMR).

JON C. OGG
August 26, 2009