Instinet to Launch Corporate Access Platform, Changing Sell-Side Driven Process
Instinet also sees an opportunity to address conflicts of interest, inherent in the current structure. “The corporate actions process is really in the hands of the sell side since they have the investment managers as clients,” said Dan Dykens, co-president of Meet the Street.
In addition, there is information leakage in this arrangement, said Dykens, who previously spent ten years working on the buy-side as a portfolio manager and trader and was most recently CEO of a financial technology firm. “The portfolio managers don’t want to have the equity institutional sales people listening to the questions and the due diligence that’s performed, out of fear that the equity sales institutional sales person will share those insights with other clients,” said Dykens. He argued there are conflicts on both sides because the companies feel they’re not necessarily meeting with the right investors. “The ideal investor for the corporation is the firm that buys 4 million shares of stocks and sits on its for five years,” explained Dykens, in the interview. “However, the best client for the sell-side firm is the client who buys 4 million shares today and sells 4 million shares the next week,” said Dykens.
On top of these issues, there’s been an 84 percent reduction on the sell-side analyst research departments, so there are fewer analysts following fewer companies, leaving a vacuum that Instinet feels it can fill. “With our technology, the company for the first time can reach out directly to the investor, without spamming them for requests for meetings,” said Dykens.
According to Jonathan Kellner, president, Instinet LLC, an affiliate of Meet the Street, “There’s a huge opportunity in the mid cap and small cap space of companies that don’t get as much love from the sell side as the used to. We’re leveraging the technology to put the power in the hands of the investor relations officers (IROs) to get a road show meeting with the investors,” said Kellner.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
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