The bleeding continues at Instinet ( INET), the electronic trading platform that's increasingly in need of a transfusion.

The company hasn't been profitable for nearly 18 months, and now it's losing key personnel to boot.

The latest defection is Will Sterling, who had been president of its Island ECN subsidiary, a trading platform Instinet acquired last year. Sterling is heading to UBS ( UBS), where he will head the U.S. institutional electronic trading desk.

Earlier this year, Mark Nienstedt resigned as president after just a few months on the job. Other notable departures over the past year have included Matthew Andresen, Island's former chief executive, and Douglas Atkin, Instinet's former and longtime chief executive.

And last month, Instinet's archrival, the Nasdaq Stock Market, hired away the electronic trading firm's president of clearing services, Christopher Concannon. Even one of Instinet's spokesman has recently gone over to Nasdaq.

Not surprisingly, the hemorrhaging at Instinet has extended to the company's stock, which has been a dud after being partially spun off in 2001 by Reuters ( RTRSY) in a $450 million initial public offering. The stock has fallen about 76% from its first day of trading.

In late-morning trading Friday, Instinet's shares were unchanged at $4.69. Instinet officials were unavailable for comment.

Todd Halky, a financial services analyst at Putnam Lovell, said losing Sterling is a blow, but that given the job he's taking, it's hard to see how Instinet could have kept him.

Still, despite the slew of high-profile departures, Halky said it would be unfair to label Instinet as a sinking ship. He notes that with all its warts, Instinet still processes roughly 28% of the trading activity in Nasdaq stocks and remains one of the dominant electronic trading platforms. (Putnam Lovell has a sector perform rating on Instinet shares, which is the equivalent to a neutral recommendation; it has no investment banking relationship with the company.)

But Instinet is seeing other exchanges and electronic platforms encroaching on its turf. In particular, Archipelago and the Cincinnati Stock Exchange, both based in Chicago, also are gaining ground on Instinet as they steal away some of Nasdaq's business.

Archipelago, for instance, is nipping on Instinet's heels. As of this week, the six-year-old firm was processing about 26% of the trading in Nasdaq stocks. That's not good news for Instinet, which had a 25-year head start on Archipelago in building a reputation on Wall Street.

Ultimately, the key for Instinet is to stop the bleeding on its income statement, said Halky. But that doesn't appear likely anytime soon. Wall Street analysts, according to Thomson First Call, are expecting Instinet to post another money-losing year in 2003.

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