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Block Trade
A large, privately negotiated trade executed as a single transaction, generally outside the normal public order book.
A block trade is a large, privately negotiated trade executed as a single transaction, generally arranged through an OTC desk (see Kaavon's "OTC Desk" glossary definition) or a dedicated institutional venue, outside the normal public order book.
Block trades exist specifically to let large participants execute substantial size without the price impact and information leakage that placing the same order directly on a public order book would cause, since other market participants would otherwise see and potentially react to a very large resting order.
Examples
- A fund looking to establish a very large position might arrange a block trade specifically to avoid signaling that intent to the broader public market.
- Block trades are generally arranged through an OTC desk or a dedicated institutional venue, rather than placed directly on a public order book.