The recent move to fold parts of Nomura’s equities business into Instinet will trigger a boon for the agency-broker in resources, increase the opportunity to provide a holistic service to the buy-side and help it expand into new asset classes.
At a press conference in Hong Kong last week, John Adair, joint head of equities, Asia-Pacific at Nomura, and Glenn Lesko, CEO of Instinet’s Asia operations, mapped out the path to consolidation, revealing the firms expected their union to be complete by the end of Nomura’s fiscal year in March.
“We will complete the work by the end of the fiscal year,” said Adair. “Already clients are switching over.”
Nomura is migrating its execution services for cash equities, programme trading and electronic products in Asia to Instinet.
“We are addressing strong demand for an independent agency broker,” said Adair. “We’ve had two great execution solutions that are now coming together into one offering.”
Lesko said the new combined platform will exist to monetise Nomura’s strong research offering, but that Instinet will be “as bundled or unbundled as the client wants”.
“We’re strong in the agency world but globally it’s a smaller world than it used to be – not all clients engage with agencies,” said Lesko, adding Instinet’s systems will be enhanced with people and functionality from Nomura, “which has a fantastic high touch offering that will not disappear”.
Lesko said the combined cost savings “will be more machines than people” but neither he nor Adair would be drawn into a conversation about numbers of layoffs. Sources close to the matter said it was probable any potential layoffs would come from the Nomura electronic execution side of the business.
The reasserted prominence of the Instinet brand could also contain other benefits to buy-side clients looking to aggregate business in more Asian markets. Until recently, Instinet has not been particularly big in emerging markets, but Lesko said it would “now be going to more markets”.
“Demand for aggregation is growing in Asia, much more than Europe and America where feed pools are declining,” said Lesko, who without being drawn into particulars added Instinet would “also be moving Instinet technology into new asset classes”.
Adair said the Nomura brand will still be the focus for execution services in its home market in Japan, where unbundling is still almost unheard of. He said Nomura’s dominant position in Japan was another factor for sticking with the status quo there.