what is a block trade & why is it done in private?

@farah_zendaya - 2 months ago - Forex Education

Anyone here familiar with the concept of a block trade, I a curious why they are hidden from the public till after execution. Thanks in advance.

@tiny_ox - 2 months ago

Block trades are large volume transactions to buy/sell an asset without spooking the market. Block trades are not disclosed to other market participants until execution is completed because disclosing it prior to execution can cause a stampede due to herd mentality.

Example of a Block Trade

A companys stock may be trading at $20 per share but for some reasons they agree to sell 100,000 units of the shares to an investor for $19 per share. Such a transaction is a block trade & will be privately negotiated and executed away from the public eye so as not to drive the price of the stock down.

@emma_durban - 2 months ago

I think block trades have to do with the dark pool where certain futures/option contracts are not pre-disclosed to the public so that market volatility is not compromised.

Block trades are usually executed for eligible investors only and the block minimum threshold usually specified by the exchange ensures that futures/options contract must have a very large volume in order to qualify for block trade execution.