Block trade

A block trade is a large transaction in a listed security arranged directly between two parties, usually through a broker's block desk, and reported to the exchange after it is agreed. Venues set the size at which an order qualifies, and the threshold differs by exchange and by security. The reason for the arrangement is structural: a very large order worked through the visible book consumes the resting interest at each level in turn, so the price moves against the party sending it as its own order is filled.

The price is negotiated rather than discovered, typically at a discount or a premium to the prevailing market that reflects which side needs the transaction more and what the counterparty takes on by absorbing it. Reporting rules require the print to reach the tape, in some jurisdictions after a permitted delay, and those prints are watched closely because they mark where institutional size has actually changed hands rather than where it was advertised.

Blocks belong to exchange traded markets, so the concept does not transfer directly to an over the counter contract, which is written bilaterally with a provider and printed to no venue at all. A contract holder meets block activity indirectly instead: a large print in a share, and the hedging that surrounds it, moves the exchange price the contract references.