Statement on Order Routing and Execution Practices

Instinet is a U.S. registered broker-dealer that provides brokerage and execution services. The following is a description of Instinet’s order-routing practices and the venues to which Instinet directs customer orders for execution.


As a broker-dealer, Instinet seeks to obtain the most favorable terms reasonably available for its non-directed customer orders. This duty of "best execution" is incorporated in the rules of the various SROs which provide standards for firms with respect to best execution and has been affirmed by the SEC in the context of the federal securities laws.

FINRA Rule 5310 requires that, in any transaction for or with a customer (or the customer of another broker-dealer), a member must use reasonable care to ascertain the best market for the security and buy or sell in that market so that the price to the customer is as favorable as possible under the prevailing market conditions.


Instinet executes transactions in equity securities, futures, and options by routing orders to exchanges, alternative trading systems ("ATSs") and other market centers, including other broker-dealers. Instinet provides algorithmic services in an effort to meet a variety of different execution objectives. Absent specific instructions from clients, and in accordance with its duty of "best execution," Instinet transmits client orders for execution to other market centers based on various factors. Such factors include, but are not limited to: market response time (i.e., speed), liquidity enhancement opportunities (i.e., the likelihood that a market center will execute orders in a size greater than the displayed size), execution rates and price improvement (i.e., the frequency and amount by which a market center executes orders at or superior to the national best bid or offer). Some market centers may execute orders at prices superior to the publicly-quoted market. In addition, Instinet may advertise indications of interest ("IOIs") on certain platforms or market centers to elicit contra side interest, in accordance with clients’ instructions. Instinet receives payment for order flow from market centers, which may be in the form of rebates or other payments for liquidity-providing or liquidity-taking orders, and such payments may be a factor in Instinet’s order-routing determinations. The source and nature of any compensation received in connection with a client’s particular transaction is available upon written request to Instinet. A general description of Instinet’s payment for order flow arrangements with the most significant market centers to which Instinet routes orders is provided in Instinet’s SEC Rule 606 quarterly report, discussed in more detail below.


Instinet effects transactions primarily on an agency basis. It may act as a principal or riskless principal to correct bona fide errors, to fulfill non-standard settlement requests, to provide ADR services, to effect foreign exchange transactions, and in other situations that do not involve substantial proprietary trading or investment. Riskless principal transactions to perform non-standard settlements are identified as principal.

Rule 5320 generally prohibits a member firm that accepts and holds a customer order from trading for its own account at terms that would satisfy the customer order unless the member immediately thereafter executes the customer order at the same or better price than it traded for its own account. Orders by institutional accounts are excepted from the requirements of Rule 5320. Instinet will trade for its own account while handling orders for institutional accounts, at prices that would satisfy the customer order, unless the institutional client opts-in to Rule 5320 protection by notifying their Instinet sales representative. Opting-in to Rule 5320 protection may limit the range of execution services that Instinet is able to offer to the client.


Certain routing destinations are made available on an opt-in basis upon client request, including market makers who may transact on a net basis. A net transaction is a principal transaction in which a market maker, after having received an order to buy (sell) an equity security, purchases (sells) the equity security at one price (from (to) another broker-dealer or another customer) and then sells to (buys from) the customer at a different price. By instructing Instinet to provide access to a market maker that will transact on a net basis, you consent to the market maker trading on a net basis with orders entered by Instinet on your behalf. If you object to the execution of transactions on a net basis, you must notify your Instinet sales representative, and the range of execution services available from the selected venue may be limited.


A list of the market centers to which Instinet routes orders, including national securities exchanges and ATSs, is available upon request. Orders may be executed on an ATS operated by Instinet, or by an Instinet affiliate, including an affiliate within the Nomura Group operating under the Nomura brand ("Nomura"). Please see section below entitled "Execution Services by Affiliates" for additional information. For more information on the venues to which Instinet directs clients’ orders for execution, please see the Legal and Regulatory tab on the Instinet Incorporated website:, "Order Disclosure."


SEC Rule 605 requires a broker-dealer that is a market center, like Instinet, to make available standardized monthly reports of statistical information concerning its order executions. The statistics required by this report do not encompass all of the factors that might be important to clients in evaluating their order routing needs, and any particular market center’s statistics encompass varying types of orders with a wide range of objectives. Accordingly, this statistical information alone does not necessarily create a reliable basis on which to determine whether any particular broker-dealer did or did not obtain the most favorable terms reasonably available under the circumstances. Please see, "Order Disclosure" for pertinent data.

Under SEC Rule 606, Instinet is required to provide you with this annual notice regarding your rights to information concerning the routing of non-directed orders for execution. Instinet is also required to prepare a quarterly report that identifies the significant venues to which it routed non-directed orders for execution during the quarter. The report describes the nature of the relationship, if any, that Instinet has with the venue, including the existence of any payment for order flow arrangements with significant venues. Please see, "Order Disclosure" for Instinet’s quarterly report. Additionally, please contact the Head of Institutional Sales at 877-467-8463 if you would like to know the venue to which your order was routed for execution, or the time of execution of the order.


Client orders may be executed by an Instinet affiliate in the local market. An affiliate may receive a brokerage commission, mark-up, mark-down or other fees when executing a trade, in addition to any such amount that may be disclosed on a trade confirmation. Transactions by Instinet-branded affiliates are primarily effected on an agency or riskless principal basis.

Instinet clients may elect to access principal execution and other services offered by Nomura, such as participation in syndicate offerings, high-touch services, portfolio transactions (including ETF and EFP facilitation) or other offerings. In these instances, Nomura may use information regarding client orders and accounts to determine whether to commit capital or otherwise facilitate the order within its discretion.

Nomura may from time to time trade for its own account while handling client orders in the same security or financial instrument at prices that would satisfy those orders. Nomura may act as a market maker in the security(ies) that are the subject of the trade. Principal orders or orders for other clients may be executed contemporaneous with a client order. Nomura maintains internal controls to limit trading units from obtaining knowledge of orders held outside of those units.

Nomura may, for purposes of facilitating, or counteracting market risk associated with the execution of, a block trade, portfolio transaction, VWAP order or other large order for one or more securities requiring special handling, trade in advance of or alongside such order or engage in hedging activity prior to or during the course of executing the order. While Nomura endeavors to limit the impact of such activities on clients’ orders, these activities may nevertheless affect market prices and the price paid or received by the client. Clients must advise Instinet in writing if they do not wish Nomura to trade principally ahead of or along with their orders. Any such instruction may limit the range of execution alternatives we are able to offer to the client.


If you place, through one or more broker-dealers, more than 390 orders in listed options per day on average during a calendar month for your own beneficial account(s), you will be considered a "Professional Customer" for purposes of Applicable Rules. You shall advise Instinet if your activity for any month meets the definition of "Professional Customer" so that Instinet may represent your orders accordingly to market centers. If your orders have previously been represented as "Priority Customer" orders, and you do not advise Instinet otherwise, your options orders placed with Instinet will continue to be represented to market centers as Priority Customer orders. Once you exceed the threshold of 390 orders per day on average during any month in a given quarter, your orders must be represented as "Professional Customer" orders for the next quarter. If, in the next quarter or any subsequent quarter, the average number of orders per day for your beneficial account(s) is 390 or less, you may notify Instinet so as to revert back to a Priority Customer designation. If you are a broker-dealer that routes options orders to Instinet you agree that you shall review such order flow and designate customer orders as professional orders where appropriate.


Customers of Instinet are advised of the following risks relating to trading outside of regular trading hours (i.e., generally between 9:30 a.m. and 4:00 p.m. EST):

  1. Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular trading hours. As a result, your order may only be partially executed, or not at all.
  2. Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular trading hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
  3. Risk of Changing Prices. The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular trading hours, or upon the opening the next morning. As a result, you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
  4. Risk of Unlinked Markets. Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
  5. Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after regular trading hours. Similarly, important financial information is frequently announced outside of regular trading hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
  6. Risk of Wider Spreads. The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
  7. Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value ("IIV"). For certain products, an updated underlying index or portfolio value or IIV will not be calculated or publicly disseminated during extended hours trading. Since the underlying index or portfolio value and IIV are not calculated or widely disseminated during extended hours trading, an investor who is unable to calculate implied values for certain products during extended hours trading may be at a disadvantage to market professionals. Additionally, securities underlying the indexes or portfolios will not be regularly trading as they are during regular trading hours, or may not be trading at all. This may cause prices during extended hours trading to not reflect the prices of those securities when they open for trading.


When investors place a high volume of orders, system capacity constraints can lead to order imbalances and backlogs, requiring more time to execute clients’ trades, or, in some instances, resulting in temporary trading halts. The following is a list of some of the risks associated with volatile markets, especially at or near open or close of the standard trading session or in connection with an order imbalance or halt in trading:

  • Prices that may differ substantially from the previous day’s close or the last reported trade;
  • Execution at a substantially different price from the quoted bid or offer at the time of order entry;
  • Increased price volatility resulting from imbalances between buy and sell orders;
  • Delays in executing orders;
  • Partial executions or execution of large orders in several transactions at different prices;
  • Locked (the bid price equals the offer price) or crossed (the bid price is higher than the offer price) markets, which prevent the execution of client trades.


Instinet charges certain fees, including commission equivalents, for the execution, clearance and settlement of a client’s transactions ("Commissions"). Instinet may change its Commission rates at any time.


Instinet is not an Authorized Participant or dealer in ETFs and effects any sale to you as agent in a secondary transaction on an exchange subject to certain exemptions from delivery of a prospectus under Section 4(a) of the Securities Act of 1933, as amended. A copy of any such prospectus is available upon request.

Rev. Jan. 2019