Instinet Routing

Discussion in 'Order Execution' started by mathewt, Sep 22, 2002.

  1. mathewt

    mathewt Guest

    With the recent change in Island orders on the QQQ and the Instinet merger this might be an interesting topic.

    During August the Instinet ECN did 17.8% of all NASDAQ volume and 19.1% of the trades. In comparison, in August Island did 11.6% of all NASDAQ volume and 16.7% of the trades.

    Although in the past Instinet has been considered an "Institutional" ECN, based on this liquidity you would think more people would discuss using Instinet as their "core" route. However when you look at the published number from most firms you find Island as the dominant route for NASDAQ trades.

    For example - last month 70% of Cybers orders went to Island and only 10% went to Instinet. This appears to be the general trend for most of the retail firms, (e.g for MB it was 44% Island - 11% Instinet in July).

    Almost every novice trader I have talked to swears that Island is the only way to go for NASDAQ trading and most think it is the largest ECN.

    From my understand - the large majority of firms do not own their own Instinet line. When a firm does not own a line their Instinet orders are routed through another firm that does own the line. This both slows the order down and increases the cost. I have a feeling that the major reasons Island dominants in many firms is that they do not own an Instinet line.

    I know a few firms that own their own Instinet line and their traders swear by INCA's execution speed lately (better fills, fast, etc.) and the price is similar to Island.

    I would be interested in people opinions on Instinet trading with their current firms (price and speed).

    Does your firm own an Instinet line?

    Are there any traders that use INCA as their core route?
  2. mathewt

    mathewt Guest

    Many professional firm (e.g. Bright) and several retail firms (e.g IB) offer all-in prices that include Instinet.

    For trader with these all-in prices - do you use Instinet significantly more for routing since there is no cost difference compared to Island? or do you find the orders are slower compared to Island?
  3. Through IB, Instinet orders are a little slower than island.
  4. mathewt

    mathewt Guest

  5. mathewt

    mathewt Guest

    Today Instinet was 11% of QQQs and 12% of SPY.

    Jumping up like I expected on the death of Island EFT trading.

    Surprised nobody is interested in this topic
  6. dlincke


    I've moved most of my Nasdaq trading from ISLD to INCA over the past year which has resulted ina markedly improved quality of fills. This is primarily due to the fact that unlike on ISLD you are not constantly being frontrun and leaned on by non-displayed orders priced tenths of a cent ahead of you.
  7. mathewt

    mathewt Guest

    I have personally found that I am more likely to get hit away from the market using Instinet compared to Island.

    My explaination has been that since many institutions / hedgefund still have Instinet only routing (especially in Europe) they tend to hit off the NBBO more. They don't have other routing options like most Island traders have.

    Of course there are Island only terminals but they are not close to the number of Instinet terminals.