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.


A Broker’s Responsibilities in Executing Customer Orders

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 regarding 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.


Our Considerations in Routing Client Orders

Instinet executes transactions in equity securities, futures, and options by routing orders to exchanges, alternative trading systems 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: client needs and expectations, price improvement opportunities (i.e., the frequency and amount by which a market center executes orders at or superior to the national best bid or offer), market response time (i.e., the speed of the execution), order size, liquidity enhancement opportunities (i.e., the likelihood that a market center will execute orders in a size greater than the displayed size), trading characteristics, accessibility to quotation data, availability of accurate information and execution rates. In addition, Instinet may advertise indications of interest 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 particular customer transaction is available at no charge upon written request to Instinet. A general description of Instinet’s order routing practices including payment for order flow arrangements with the most significant market centers to which Instinet routes held, non-directed orders is provided in Instinet’s SEC Rule 606 quarterly report, discussed in more detail below. 

 

“Not Held” or “Held” Orders

The purpose of this disclosure is to confirm the way Instinet will handle orders in equity securities for its institutional and broker dealer clients. When clients send non-directed orders to the firm, unless the client expressly states otherwise, the client is providing the firm with discretion regarding the price and timing of their executions. Unless stated otherwise or there are no specific order instructions, it is understood that all such orders entered with Instinet will be deemed to be handled and executed on a “not held” basis and Instinet will work such orders accordingly.

A “not held” order provides Instinet with discretion to exercise its judgment regarding the price and/or time at which a trade is executed in order to seek to obtain best execution of your order. According to FINRA rules, a “not held” order is not considered a priced order. When handling “not held” orders for you, Instinet is not generally required by regulation to display or protect the order, though ILLC is obligated to provide best execution.

Please note that “held” orders do not permit discretion in the handling of your order. In addition, should you enter a market order or limit order, such “held” orders obligate Instinet to either immediately route that order to another market center, or execute your market order immediately at the then prevailing market price or your limit order (or better), which may not necessarily be the best price that can ultimately be obtained. Should you have any questions or wish Instinet to treat your orders other than on a “not held” basis, please contact your Instinet registered representative on your account.

 

FINRA Rule 5320 – Prohibition Against Trading Ahead of Customer Orders

FINRA Rule 5320 (“Rule 5320”) applies to customer market and limit orders in securities that are “OTC Equity Securities” as defined in FINRA Rule 6420, as well as securities that meet the definition of “NMS stock” as defined in Rule 600(b)(47) of Regulation NMS. Rule 5320 generally prohibits a FINRA member firm that accepts and holds such 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 (unless an exception applies). Among the several exceptions within Rule 5320 are (i) exceptions for large orders and orders from institutional accounts, and (ii) a "no knowledge" exception. Additionally, and consistent with existing regulatory guidance, "not held" orders are excluded from the scope of Rule 5320.

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. Please notify Instinet if you wish to “opt-in” to the protections of Rule 5320, in which case Instinet will obtain your consent to trade ahead of or along with your order on a case-by-case basis.  Your Instinet registered representative will be happy to assist you. Please see "Execution Services by Affiliates" below.

 

Regulation SHO  

When you place an order with Instinet, the order must be marked as “long”, “short”, or “short exempt.” When you place an order to sell a security “long”, you are representing that you own the security and will deliver it in good form by settlement date. If you do not own the security, or will borrow for delivery, your order should be marked as “short.” The appropriateness of the “short exempt” marking should be reviewed in the context of the SEC’s short-sale price test rule (SEC Rule 201) and would generally not be appropriate to utilize to reference an exemption from a locate requirement. Instinet is required to close out any fail to deliver position in an equity security by the opening of trading on Settlement Date + 1 day (“S+1”) for short sales and on Settlement Date+3 (“S+3”) for long sales. The SEC has prescribed certain allowable extensions for, among other things, fails to deliver that result from long sales, or those that result from the sale of a security the person is “deemed to own”. If you do not deliver the shares by settlement, Instinet, while attempting to minimize the impact of the fail(s), will be required to purchase these shares from another source in order to cover the position. If the fail in a security sold short is not closed-out past the opening of trading on S+1 (or a permissible extension prescribed under Regulation SHO), Instinet will be prohibited from accepting any short sales from any client in that security without a pre-borrow until the fail has been covered and those shares have cleared and settled.

 

Large Trader Reporting 

SEC Rule 13h-1, the Large Trader Reporting rule, requires a person/entity that meets the definition of a Large Trader to: 1) report itself to the SEC via filing of the Form 13H; 2) obtain a Large Trader ID (“LTID”) from the SEC; 3) send its LTID to all executing and clearing broker-dealers through whom it transacts and identify each account to which the LTID applies; and, 4) submit periodic filings to the SEC.  
A Large Trader is defined as a person or entity (the “client”) that exercises investment discretion over one or more accounts in NMS equity securities and/or Listed Options wherein the client’s transactions equal or exceed either: two million shares or shares with a fair market value of $20 million during any calendar day, or 20 million shares or shares with a fair market value of $200 million during any calendar month. Instinet is obligated to detect unidentified large traders and assign its own unique identifier if a client does not provide the client’s unique identifier. The unique identifier is reported to FINRA via the Consolidated Audit Trail, and to the SEC or other SROs via Blue Sheet submissions, if requested. 


FINRA Rule 2124

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.


Execution Venues

A list of the market centers to which Instinet routes orders, including national securities exchanges and ATSs, is available at no charge upon request. Orders may be executed on an ATS operated by Instinet. Orders may also be executed 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: www.instinet.com/legal.php, “Order Disclosures.”


SEC Rule 605 – Disclosure of Order Execution Information

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 www.instinet.com/legal.php, “Order Disclosures” for pertinent data.

 

SEC Rule 606 – Annual Customer Notification regarding Disclosure of Order Routing 

SEC Rule 606 requires Instinet to notify you regarding your ability to receive, free of charge, information concerning routing of your orders for execution. In accordance with SEC Rule 606, upon request, Instinet will provide a report on its handling of your orders that were submitted on a not held basis for the prior six months by calendar month. Specifically, you may request the identity of the venue to which the identified orders were routed, whether the orders were directed or non-directed and the time of any resulting transactions.

Instinet is also required to prepare a quarterly report that identifies the significant venues to which it routed certain 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 www.instinet.com/legal.php, “Order Disclosures” for Instinet’s quarterly report. Additionally, please contact Instinet’s Electronic Trading Team at 212-310-9570 or usets@instinet.com if you would like specific information, at no charge, regarding the routing and execution of orders handled by Instinet.


Payment for Order Flow

The SEC and FINRA require all broker-dealers to inform their customers when a new account is opened and annually thereafter of their payment for order flow practices (compensation received for placing orders for equity securities through national securities exchanges, over-the-counter market makers, alternative trading systems, electronic communications networks and other broker-dealers (collectively, “market centers”). Consistent with the overriding principle of best execution, Instinet routes orders to various market centers. Instinet receives remuneration on certain orders (generally in the form of per share cash payments or rebates or through profit sharing arrangements) for routing orders to particular market centers for execution.  Such remuneration is considered compensation to Instinet and the source and amount of any such compensation received in connection with your transactions will be disclosed to you upon your written request.  Instinet takes a number of factors into consideration when determining where to route orders, including but not limited to: speed of execution, price improvement opportunities (execution at prices superior to the then prevailing inside market); cost; automatic execution guarantees; the availability of efficient and reliable order handling systems; and the level of service provided.  As noted above, all other factors being equal and consistent with Instinet’s overall best execution obligation to our customers, Instinet may consider whether Instinet will receive cash or non-cash payment for routing order flow and reciprocal business arrangements.  Instinet regularly and rigorously reviews transactions and market centers for execution quality based upon the foregoing factors. If you are a customer of Instinet and would like additional information regarding our payment for order flow or order routing practices, please contact 606Requests@instinet.com.


Execution Services by Affiliates

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 fee 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.


Transactions in Non-US Markets

Certain transactions in equity securities executed on a non-U.S. market in a foreign currency will be converted to U.S. dollars based on quotations by foreign exchange dealers and traders in one or more foreign exchange trading platforms in which Instinet participates. Instinet aggregates the foreign exchange component of multiple equity security trades executed over a limited period of time, identifies possible netting opportunities and executes foreign exchange trades as principal for its own account. Instinet may make or lose money trading foreign exchange as principal on any trade, but expects to make money over time.

 

Listed Options

Options involve risk and are not suitable for all investors. Please ensure that you have read and understood the current options risk disclosure document provided by the Options Clearing Corporation before entering into any options transactions. The Options Clearing Corporation's publication, "Characteristics and Risks of Standardized Options," is available by contacting your Instinet representative or at https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document. The risks of options trading should be weighed against the potential rewards.   The Risks include, but may not be limited, to: 

  • Call or put purchasing: The risk of purchasing a call/put is that investors will lose the entire premium paid. 

  • Uncovered call writing: The risk of selling an uncovered call (including short call position in a ratio call spread) is unlimited and may result in losses significantly greater than the premium received. 

  • Uncovered put writing: The risk of selling an uncovered put (including short put position in a ratio put spread) is significant and may result in losses significantly greater than the premium received. 

  • Covered call or put writing: Selling a covered call or put limits the potential profit of a long or short stock position respectively. 

  • Call or put vertical spread purchasing (same expiration month for both options): The basic risk of effecting a long spread transaction is limited to the premium paid when the position is established. 

  • Call or put vertical spread writing (same expiration month for both options): The basic risk of effecting a short spread transaction is limited to the difference between the strike prices less the amount received in premiums. 

  • Call or put calendar spread purchasing (different expiration months & short must expire prior to the long): The basic risk of effecting a long calendar spread transaction is limited to the premium paid when the position is established.

 

Option Origin Code Capacity/Professional Customer Disclosure

All listed option orders that you transmit to Instinet for execution should contain the capacity in which they should be represented on the U.S. Listed Option Exchanges.

If your listed option orders have been previously represented as a “Priority Customer”, then absent specific instructions from you on an order-by-order basis, all such listed option orders will continue to be represented and executed on the U.S. listed option exchanges as “Priority Customer” orders. The term “Priority Customer” is defined by the applicable U.S. listed options exchanges as a person or entity that (i) is not a broker or dealer in securities and (ii) does not place more than 390 orders in listed options per day on average during any month, based on a calendar quarter look-back.

Depending upon the number of listed option orders entered with and away from Instinet, your listed option orders may result in you being considered a “Professional Customer”.  A “Professional Customer” is defined by the applicable US. listed options exchanges as any person or entity that (1) is not a broker-dealer in securities, and (2) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). You must aggregate the average number of listed option orders placed per day for all of your legal entity’s beneficial accounts held at all broker-dealers. During the upcoming year, if your order capacity changes to “Professional Customer” due to that fact that your listed option activity at Instinet and other broker-dealers triggers this order representation requirement, please notify your registered representative immediately. Note that once your account(s) crosses the threshold of 390 listed option orders per day on average during any month in a given quarter, then your orders must be marked and represented as “Professional Customer” in the next calendar quarter. Should your listed options activity fall below the “Professional Customer” thresholds, please notify your registered representative in order to change the order representation to “Priority Customer” going forward. In the event there are any changes to your listed option order capacity/representation and irrespective of where your listed option orders have been executed, please contact your registered representative immediately.
 

Option Position Limits

U.S. regulations impose position limits on the maximum number of equity and index exchange listed and over-the-counter (OTC) put and call options covering the same underlying security that may be held or written by an account or by accounts acting in concert or by accounts under common control.  Under the terms of Instinet’s Options Trading Addendum, you agree not to violate these limits and, without a qualified hedge exception, authorize the Firm to take action to bring your positions into compliance.

 

Option Exercise Limits

U.S. regulations impose exercise limits on the maximum number of equity and index listed and OTC options covering the same underlying security that can be exercised within any five (5) consecutive business day period by an account or accounts acting in concert or under common control. The exercise limit is the same as the position limit for the underlying security. If you have an open option position that is above the established position limit, but have on a qualified hedge exception, you are permitted to exercise the amount of options that you are fully hedged for within any five (5) consecutive business day period.

 

FINRA Rule 2265, CBOE Rule 9.20 – Risks of Extended Hours Trading

Customers of Instinet are advised of the following risks specific to "extended hours trading", meaning trading outside of the regular trading hours of 9:30 a.m. and 4:00 p.m. EST. You should consider the following before engaging in extended hours trading.

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.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.

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.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.

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.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.

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.

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.

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.

Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value (“IIV”) and Lack of Regular Trading in Securities Underlying Indexes. For certain products, an updated underlying index or portfolio value or IIV will not be calculated or publicly disseminated during CBOE Global Trading Hours. Since the underlying index or portfolio value and IIV are not calculated or widely disseminated during Global Trading Hours, an investor who is unable to calculate implied values for certain products during Global Trading Hours may be at a disadvantage to market professionals. Additionally, securities underlying the indexes or portfolios will not be regularly trading as they are during Global 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.


Conditions Affecting Trade Executions

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.


Commissions and Other Charges

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.


Exchange Traded Funds

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.


Low-Priced Securities Disclosure

Investing in low-priced securities is speculative and may involve considerable risk. Low-priced securities often exhibit high price volatility and erratic market movements. Trading low-priced securities may be subject to significant risks, increased regulatory requirements and oversight and additional fees. Instinet reserves the right to reject orders in low-priced securities.


Market Access Disclosure

Consistent with the Firm’s obligation to maintain a fair and orderly market, Instinet reserves the right to reject an order based on its systemic controls as required pursuant SEC Rule 15c3-5.

 

Revised Jan,  2026