Definition of Block trade:
A block trade is the sale or purchase of a large number of securities. A block trade involves a significantly large number of equities or bonds being traded at an arranged price between two parties. Block trades are sometimes done outside of the open markets to lessen the impact on the security price. In general, a block trade involves at least 10,000 shares of stock, not including penny stocks, or $200,000 worth of bonds. In practice, block trades are much larger than 10,000 shares.
A large lot of stocks or bonds traded in a single transaction. A securities transaction of at least 10,000 shares or a bond transaction of at least $500,000 is considered a block trade.
Due to the size of block trades, both on the debt and equities markets, individual investors rarely, if ever, make block trades. In practice, these trades typically occur when significant hedge funds and institutional investors buy and sell large sums of bonds and shares in block trades via investment banks and other intermediaries.
How to use Block trade in a sentence?
- Block trades can be made outside the open market through a private purchase agreement.
- These trades are generally broken up into smaller orders and executed through different brokers to mask the true size.
- Block trades are large trades made by institutional investors.
Meaning of Block trade & Block trade Definition