Instinet to Deploy Pivot's IMTRADER

The institutional brokerage arm of Instinet is deploying instant messaging (IM) services via IMTRADER from Pivot Solutions to improve communications for its buy- and sell-side clients.

IMTRADER offers communication, trading and research distribution capabilities certified to run over the AOL Instant Messenger (AIM) network from America Online (AOL). The service also supports the FIX protocol.

"IMTRADER does two things for us," says Tal Cohen, first vice president of business development at Instinet. "It allows us to complement our existing distribution channels by going out to customers who either don't have the technology infrastructure to get to us or can't afford it," Cohen says. IM is a critical tool for traders because it allows orders to be placed in a cost-effective, real-time medium, he says.

IMTRADER can be distributed as a "total black box" solution completely hosted by IMTRADER, requiring no additional hardware for the client. Brokers can also purchase an enterprise license and run IMTrader inside their own infrastructure with minimal IT requirements, such as the addition of Dell servers running Microsoft Windows, says Furqan Nazeeri, president and CEO of Pivot Solutions.

According to Cohen, the distribution of IMTRADER, which became available to clients at the beginning of this month, began with broker dealers. "What we're looking to do is deploy the product across the user base that wants to access our crossing networks,"Cohen says. He declines to provide names of specific firms but acknowledges that the solution has been implemented only with sell-side institutions.

"We have about 30 to 40 broker-dealers who said they were willing to take on the distribution technology or willing to communicate through IMTRADER," says Cohen. But over time, says Cohen, the goal is for Instinet to reach all of its clients.

Instinet's securities-crossing platforms include Last Daily Cross (LDX), Intraday Daily Cross (IDX) and the Volume Weighted Average Price Cross (VWAP). LDX provides customers with the capability to participate in an overnight match at the markets' closing price for that day while IDX provides the ability to trade three times daily in a confidential arena, eliminating the market impact that occurs in auction markets, thereby reducing costs. The VWAP cross-matches anonymous buyers and sellers of U.S. equities before the U.S. markets open.

Cohen says that there were no other vendors considered during the selection process. Pivot was picked because of its track record, and Cohen confirms that they have been working with Pivot for about three months. "The great thing about IMTRADER is that it allows you to leverage FIX, making it very easy for us to integrate it," says Cohen.

A spin-off, Pivot began operations in 2002 as part of Eze Castle Software and was launched last year.