Abstract

The case describes the evolution of electronic communication networks in general, and Instinet in particular. The case deals with the functioning of ECNs, the advantages of ECNs, the role of ECNs in equity markets, and the competition in the ECN market. Instinet was the first ECN and soon became a leader in the ECN market. Slowly competition increased in the market, and Instinet was considering other areas of operations to maintain its leadership position. The case also describes the strategies adopted by Instinet to deal with the growing competition in the ECN market.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Operation of electronic trading systems and ECNs.

Keywords

Evolution, electronic communication, networks, Instinet, ECN, equity markets, leader, operations, strategies