"The depth of the human tragedy is unfathomable, and our thoughts and prayers are with all those who are suffering," said Douglas Atkin, President and CEO of Instinet Group Incorporated. Instinet's Clearing and Settlement operations as well as a telecommunications hub were located in the World Trade Center. "We are facing the trauma of losing two employees, who we will miss deeply, and the strain on our staff that this crisis has evoked," said Atkin. "However," he added, "our entire team has pulled together, working tirelessly, cooperatively, and effectively."
"From a technical and operational standpoint, our back-up systems performed superbly and rapidly, and our U.S. equity business resumed without incident when the U.S. markets reopened," said Atkin. Further, he noted that the company's international operations continued without interruption throughout the crisis. "Going forward," he said, "we believe that Instinet's market leadership and strong balance sheet will enable us to overcome any short-term challenges and continue to provide innovative trading and independent research services to our global client base."
The company continues to assess the impact of the recent tragedy on third quarter results. It estimates that the impact to pre-tax earnings in the third quarter will be approximately $18 million, or $0.04 cents per share after tax, consisting primarily of lost revenue associated with the four-day closure of U.S. equity markets. The company believes that substantially all assets physically located at the World Trade Center were covered by its insurance.
Additionally, for most of the third quarter, weak economic conditions and other factors have dampened overall market volumes, and have resulted in reduced trading by some of Instinet's broker-dealer customers. Average daily volumes have improved markedly during September, normally the strongest month in this seasonally slow period, but the forced four-day closure of U.S. markets will impact volumes this month and therefore for the quarter as a whole. Instinet's share of trading volume in Nasdaq-listed equity securities is expected to be 13.3 - 13.5% in the third quarter, slightly ahead of the comparable period in 2000 but below the second quarter level.
Instinet anticipates that third quarter 2001 earnings will be between $0.07 and $0.09 per share, taking into account the estimated $0.04 per share impact of recent events but excluding the one-time pretax charge of $25 million related to restructuring that was previously announced.
Disclosure of Monthly U.S. Equity Trading Volumes
Beginning with this release, Instinet will disclose its U.S. equity trading volume on a monthly basis. In the future, these volume figures will be disclosed approximately five business days after the end of each month. For convenience, the table immediately below shows Instinet's U.S. equity trading volume for each month between January 1999 and August 2001.
Weekly Release of Preliminary Volumes
Additionally, Instinet will soon begin to make available on its website its preliminary U.S. equity trading volume on a weekly basis. Each week, the company will disclose its average daily volume for the prior week. There may be some adjustment to these weekly numbers in calculating final monthly share volumes. The weekly update will be accessible using the following URL: http://www.instinet.com. For convenience, the table below shows weekly average daily equity trading volume from the beginning of July 2001.
