Nasdaq reportedly offers $2.5 billion for Instinet


NEW YORK - Nasdaq Stock Market Inc., the largest electronic marketplace, is in exclusive talks to buy Instinet, an institutional brokerage and electronic trading network partly spun off by the Reuters Group in 2001, people briefed on the talks said yesterday.

Instinet has been for sale since November. It had been expected that the company, which has an electronic trading network and an institutional brokerage business, would be sold in two parts, but Nasdaq is in talks to buy the entire business for about $2.5 billion, those who were briefed said.

It was unclear what Nasdaq would do with the institutional brokerage.

A combination of the two companies would alter the arcane and highly competitive electronic trading landscape.

The three major electronic venues for institutions and retail investors to trade stocks and options are Nasdaq, Instinet and ArcaEx, the Archipelago Exchange.

A Nasdaq-Instinet combination would likely force ArcaEx into a deal and pose a more substantive threat to the New York Stock Exchange, which is moving toward a combination of electronic and floor-based trading.

A spokesman for Instinet declined to comment yesterday, as did a Nasdaq spokeswoman.

Shares of Instinet slipped 4 cents, to $5.77 in trading on the Nasdaq stock market yesterday. Reuters owns 63 percent of the company.

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