Archipelago Holdings Inc., which operates the ArcaEx electronic stock market, may buy Reuters' Instinet subsidiary for as much as $3 billion, the Financial Times says, citing unidentified people close to the situation.
Archipelago is thought to be interested primarily in Instinet's electronic communication network (ECN), called Inet, rather than the institutional brokerage part of the business.
Inet, which handles trading of about 500m shares a day, was formed by the merger of the ECN businesses of Instinet in which Reuters has a 62% stake and Island, the trading platform acquired in 2002.
In the first half of last year, Instinet reported operating profits of £22m ($41m) following a significant restructuring and cost-cutting.
One of the original four all-electronic exchange networks, Chicago-based Archipelago earlier this month announced plans to buy the Pacific Stock Exchange for $50.7 million. The group has long coveted Inet's market share volume.
Reuters has not commented on the reports, although the news and information group has spent much of the past year shedding non-core assets as part of its Fast Forward cost-cutting programme. In November, Reuters' admitted that it was looking at a possible Instinet sale, merger or other business combination or corporate transaction.
Reuters shares climbed 1.4 per cent on the reports to 393.5 pence.
Shares in Archipelago fell 43 cents to $19.99 on Thursday, in advance of a fourth quarter trading update that saw flat profits and six per cent revenue growth at the exchange. Q4 net income at $12.5 million was up by only $0.1 million on the year earlier period as revenues climbed to $138.7 million thanks to an $8 million rise in turnover from higher market data fees.