BLOCK TRADE
Back to GlossaryDefinition
A large, privately negotiated trade of securities executed outside the open market to minimize price impact.
Summary
A block trade is a large-volume transaction of securities (typically 10,000 shares or more) that is negotiated privately between institutional investors and executed away from public exchanges. These trades are done 'off-market' to prevent the large order size from dramatically moving the stock price up or down, which would be costly for the parties involved. Think of it like buying in bulk - institutions get better pricing and market stability by negotiating directly rather than flooding the public market with a massive order.
Usage Context
Understanding block trades is important when studying market structure, institutional investing, price impact analysis, and how large transactions can affect market liquidity and volatility.
Common Confusions
- Thinking block trades are secret or illegal (they're regulated and reported)
- Confusing block trades with insider trading
- Assuming block trades completely bypass market regulations
- Believing block trades always get better prices than market trades
- Mixing up block trades with high-frequency trading
