Reuters Drops The Other Shoe: Art-2 Son Of Art Couples Instinet With IDN

Reuters fired another salvo in its North American equities campaign, treating analysts at a July 29 meeting to a sneak preview of the much-anticipated ART-2.

The ART-2 -- or ART 2000, as it may be dubbed -- represents a bold off-exchange thrust for Reuters's equities strategy. The new product, which will initially be marketed as a replacement for the aging Instinet terminal, will be released by Reuters in late 1988.

Essentially, the ART-2 replicates the functionality of the Instinet terminal within one of its windows, while also providing value-added access to the Reuter Integrated Data Network (IDN).

Instinet allows subscribers to anonymously buy and sell large blocks of stock. Any domestic security with a symbol can be traded, as well as a dozen recently added ADRs. U.K. equities are in the works. Under the Reuters umbrella less than a year, the service represents a greater challenge to stock exchanges than to quote vendors.

The ART-2 model shown at the analysts meeting was a "very advanced development prototype," says Tim Hillyar, Reuters product manager, but the final version "will not look much different to the user.' ART-2 still faces two to three months of alpha (in-house) testing and a like period of beta testing before commercial release in early 1988.

Like its predecessor, ART-2 is built around an Intel 80286-driven NCR clone running Microsoft Windows. The younger ART requires two full-duplex phone lines, one to tie into the Instinet network (1200 bps) and one to access IDN through the nearest Reuters data center (switchable, as high as 9600 bps).

There are currently eight IDN data centers worldwide. At present only one ART-2 can be supported by each pair of leased lines, but development personnel at Reuters's Hauppauge research and operations center say that it may be possible to improve on that ratio.

Because of the extraordinary memory requirements associated with handling the IDN feed in real time, the ART- 2 will be equipped with more than two megabytes of RAM and a 40+ Mbyte Winchester drive. The video display capability of ART-2 will also exceed that of its elder, offering 752 x 410 line resolution, with close to 80 columns across in a windowing environment.

ART-2 initially will be installed as a stand-alone workstation. Plans are being hatched, however, to develop a file server capable of supporting multiple ART-2s on a local area network.

While the IDN information available through ART-2 is currently limited to securities prices, Reuters hopes to add a consolidated, fully cross-indexed news feed to both IDN and ART-2 before roll-out in the first quarter of 1988.

In addition to providing Instinet functionality, applications planned for ART-2 include tick-by-tick quote retrieval, dynamically updated tick graphs (up to 10 on a screen), limit-minding and portfolio management (Reveal, still undergoing adaptation to the MS Windows environment).

Pricing and marketing plans for ART-2 are still in flux, but one of the earliest targets will be the current client base of Instinet, upwards of 450 institutions. Instinet customers traded 630 million shares through the system during the first six months of 1987 -- a 50% gain over last year.

The ART-2 accomplishes the dual purpose of upgrading the Instinet workstation and integrating some of the properties recently acquired by Reuters, while furthering the overall strategy of North American market penetration. Along with the Instant-Link and Blend services added through the I.P. Sharp acquisition, the ART-2 will contribute to an integrated global securities trading system.