Individual investors will now have access to Instinet's best-priced orders, volume information, last sale and most active information on Yahoo Finance. Instinet, a wholly owned subsidiary of Reuters Group, previously made this data available only to professional trading firms and financial institutions.
"Retail investors will now have access to information, which has helped institutional investors improve their trading performance for the past 30 years," Doug Atkin, CEO of Instinet, said in a statement.
In the fourth quarter, Instinet plans to join E*Trade, Datek Online, Charles Schwab and others by allowing retail investors to trade directly through Instinet.com.
The move marks a significant evolution in business strategy by Instinet, which served the institutional investment community exclusively since its founding in 1969. Instinet is part of a growing group of financial services companies that are trying to reach out to the increasingly influential individual investor. Reuters Group acquired Instinet in 1987.
"I think it's symbolic as much as anything," said Dave Nadig, a portfolio manager with MetaMarkets.com, a mutual fund company that displays trades in real time.
Retail traders or individual investors, who once took a backseat to institutional brokers, have recently become a significant force on Wall Street. Individual investment accounts topped $1 trillion for the first time in the first quarter of 2000, according to a report by U.S. Bancorp Piper Jaffray. By comparison, Morningstar estimates the combined asset value of U.S. open-end mutual funds is $4.73 trillion.
The Internet, which allows individual investors to access many of the same tools and public documents that institutions have used for years, has helped fuel the retail boom.
The ranks of individual investors' online brokerage accounts are expected to balloon to 28.7 million by 2003, worth a combined $3.5 trillion. This is up from 12.7 million online accounts worth $875 billion in 1999, according to International Data Corp.
In response, an increasing number of Wall Street institutions are offering services directed at this group. After-hours and before-hours trading has opened up to the retail investor, as have some IPOs and venture capital investments.
"Since most brokerage firms are paid not on a per-share commission but on a flat-trade fee, there's nobody to take more seriously than the individual investor," Nadig said.