Block trade

block trade is a permissible, noncompetitive, privately negotiated transaction either at or exceeding an exchange determined minimum threshold quantity of shares, which is executed apart and away from the open outcry or electronic markets.[1] Major broker-dealers often provide "block trading" services—sometimes known as "upstairs trading desks"—to their institutional clients.[2] In the United States and Canada a block trade is usually at least 10,000 shares of a stock or $100,000 of bonds but in practice significantly larger.[3]

For instance, a hedge fund holds a large position in Company X and would like to sell it completely. If this were put into the market as a large sell order, the price would sharply drop—by definition, the stake was large enough to affect supply and demand causing a market impact. Instead, the fund may arrange for a