What Is A Block Trade
Block trades are common, and while they rarely cause major moves in markets, they can have an impact on prices of specific securities.
Definition and Example of a Block Trade#
Block trades are transactions involving large quantities of a security. The New York Stock Exchange (NYSE) defines a block trade as a transaction order that’s at least 10,000 shares or has a market value of $200,000 or more. For example, a $120,000 order for 10,000 shares of stock at $12 per share, and a $200,000 order for 2000 shares at $100 per share are both considered block trades. In practice, most block trades could be of much larger value. Block trades are used by institutional investors like mutual funds, insurance companies, and banks to buy or sell large quantities of securities that may get better pricing and reduce trading expenses. Advisory firms that manage individual portfolios use block trades instead of separate smaller transactions for each client account. Corporate insiders may use block trades to buy or sell their holdings. With these negotiations, the investor may avoid additional fees and potentially unfavorable changes in price.
How a Block Trade Works#
When an institutional investor has a large block transaction they can reach out to a block house where a block house trader may break up a block trade into multiple pieces, arrange for a direct transaction with a single buyer, or purchase all or part of the block themselves. Block trades are executed between buyers and sellers outside of the national exchanges because of their size. That sometimes is also referred to as trading in the “upstairs market.” National exchanges such as the NYSE or Nasdaq are “auction markets,” where orders are placed, posted, and bid on. Large buy or sell orders placed on a national exchange can significantly impact the price up or down before the order gets filled. Block trades are public just like trades on the national exchanges, but they are not auctions. A block trade is posted in the public domain after it is completed. It is not affected by the auction process. Block trades of stocks and bonds are regulated by the Securities and Exchange Commission. Block trades of commodities, futures, and options are regulated by the Commodities Futures Trading Commission.
Types of Block Trades#
Buy Side Block Trade#
The “buy side” of the financial markets are organizations that have money to invest on behalf of their clients. Mutual funds, pensions, hedge funds, and insurance companies are “buy side.” The buy side routinely purchases and sells large blocks of securities, often using alternative trading systems.
Sell Side Block Trade#
The sell side of the financial markets are firms that create and sell securities to the buy side. Investment banks and advisory firms are on the sell side. Bought deals or accelerated book builds are sell side block trades. The investment bank may purchase the entire block from the seller, and then resell it to buy side clients. Bought deals are often used to sell the holdings of affiliated shareholders, or a new securities issue under a company’s shelf filing with the SEC.
What Block Trades Mean for Individual Investors#
Individual investors rarely use block trades, but they can affect their portfolios. Research suggests that the size of the transaction and nature of the block transaction (buy or sell) determines whether the temporary price impact on the stock in the general market would be positive or negative. Also, given that a word of the block transaction is put out by block houses, any information leaks could also affect stock prices before the block transaction gets completed. Block trades may have some lasting impact on the price of a stock. Research suggests that the permanent price impact of a buy block trade is larger than that of a seller-initiated block transaction. Historical prices of the stock also play a role in whether the price impact of a block trade is fleeting or lasts longer. Also, a block trade could have a permanent price impact if the stock does not have close enough substitutes, which means the demand-supply forces may not function as perfectly as expected. Some brokerages may offer online tools to scan the markets for block trades. While there is some research to suggest that mimicking large corporate insider trades may be profitable for some investors, there are also a number of studies that suggest the opposite.
Внебиржевые сделки(блок-трейды) на фьючерсах биржи CME.
На сайте биржи www.cmegroup.com/clearing/trading-practices/block-trades.html дано следующее определение Block-trade: это крупная фьючерсная (опционная) сделка, заключенная в частном порядке и исполнена отдельно от публичного рынка(т.е. не на открытых торгах через стакан), а напрямую между участниками. Предназначена для удовлетворения потребностей институциональной торговли. По правилам такая сделка должна быть зарегистрирована на бирже в течение 15 мин. после её заключения. Есть несколько разновидностей блок-трейдов: https://www.cmegroup.com/education/courses/market-regulation/block-trades/block-trades-tas-tam-and-btic.html
Здесь datamine.cmegroup.com/#/datasets/cme.block указано, что данные о таких сделках можно покупать у самой биржи. 1500$ в месяц за четыре биржи CME Group, или по 750$ каждая в отдельности. Почти за даром.
Но их можно вычислять из биржевых тиковых данных, которые стоят на много дешевле(смотрим мой предыдущий топик). Фрагмент тикового файла Time&Sales со сделками по фьючерсу на нефть CL, майский контракт, от 13.04.2021:
Time Price Vol Total
20210412 180000 59.64 1 1
20210412 180000 59.64 2 3
20210412 180000 59.64 2 5
20210412 180000 59.64 2 7
20210412 180000 59.64 2 9
.
20210413 165959 60.47 1 306697
20210413 165959 60.45 1 306698
20210413 165959 60.45 1 306699
Биржа даёт время каждой сделки (по Нью Йорку), цену, объём и суммарный объём торгов за текущую сессию. TotalVolume начинается от нуля на открытии сессии и кумулятивно увеличивается с учётом сайза каждой последующей сделки.(казалось бы зачем? Можно и самому посчитать). На закрытии сессии он составил 306699 контрактов. Этот объём мы видим на сайте биржи на дневном графике (cmegroup.com использует графики tradingview). 
Далее, самостоятельно вычисляем TotalVolume торгов за всю сессию, суммируя объёмы всех трейдов из файла Time&Sales. Я это делаю в своей старой проге, нарисовав дневной бар из этих данных: 
И тут видим совсем другой объём — 208053. Возникает подозрение: либо данные не полные, либо просуммировал не правильно. Долго разбирался и что выяснил. Если на сайте биржи(или tradingview) на графике с более мелким таймфреймом(меньше дневного) просуммировать вертикальные объёмы всех баров за эту же сессию, так же получим 208053. На скрине ниже в калькуляторе просчитана сумма вертикальных объёмов всех шести 4-ох часовых свечей за этот день. Нужно учитывать, что дневной объём считается от клиринга до клиринга, т.е. от начала сессии по НьюЙорку в 18-00 предыдущего дня и до закрытия в 16-59 текущего дня. В 17-ом часу торги закрыты, клиринг. Если на сайте tradingview и время Московское, то всё проще — с 1:00 до 23:59 одним днём. 
Мало кто знает о таком отличии объёмов дневного и более младших таймфреймов.
Откуда разница? TotalVolume за сессию 306699, который считает и транслирует биржа, учитывает внебиржевые блок-трейды, которых в файле Time&Sales, конечно, же нет. Что это нам даёт?
20210413 120443 60.42 1 199278
20210413 120446 60.42 1 199281
20210413 120447 60.42 2 200283
В данном фрагменте тиковых данных видим что после второго трейда TotalVolume составлял 199281 контракта. Далее прошла сделка в 2 контракта, а суммарный объём увеличился на 1002 контракта. Это говорит о том, что между этими сделками биржей был зарегистрирован блок-трейд размером в 1000 контрактов. Теперь не сложно вычислить и вывести такие сделки на график.
Имеем ввиду, что здесь цене блок-трейда присваивается значение цены текущего тика из Time&Sales. Но мы не знаем, какой она была на самом деле. Настоящая цена блок-трейда может отличаться от рыночной, хотя и не значительно. Возможно, в такой информации есть некая ценность. Ну, тогда 1.5к в месяц, милости просим, покупайте данные у биржи. А некоторые блок-трейды вааще заключаются по условной цене, которая будет определена как цена закрытия текущей, ещё не закончившейся сессии. Тоесть, цена сделки в момент её заключения и регистрации ещё не известна.
Добавлю, что сделки с фьючерсами на нефть, совершаемые на открытом рынке через стакан, как правило, не сильно превышают 500 контрактов. А блок-трейды могут достигать до 5000 и более.
Аналогичным образом можно вычислять и внебиржевые DarkPool-сделки с акциями на биржах NYSE и NASDАQ.
Block Trade: Definition, How It Works, and Example
James Chen, CMT is an expert trader, investment adviser, and global market strategist.
Investopedia / Mira Norian
What Is a Block Trade?
A block trade is a large, privately negotiated securities transaction. Block trades are arranged away from public markets to lessen the effect on the security’s price. They are usually carried out by hedge funds and institutional investors via investment banks and other intermediaries, though high-net-worth accredited investors may also be eligible to participate.
The New York Stock Exchange and the Nasdaq define a block trade as one involving at least 10,000 shares of stock, or one worth more than $200,000. Most block trades far exceed these minimums.
Key Takeaways
- A block trade is a large, privately negotiated securities transaction.
- Block trades are generally broken up into smaller orders and executed through different brokers to mask the true size.
- Block trades can be made outside the open market through a private purchase agreement.
Understanding Block Trades
A bulk-sized sell order placed on a stock exchange may have an outsized effect on the share price. In contrast, while a block trade negotiated privately will often provide a discount to the market price for the buyer, it will not inform other market participants about the additional supply until the transaction has been publicly recorded.
Block trades not yet publicly disclosed are considered material non-public information, and the financial industry’s self-regulatory organization, FINRA, prohibits the disclosure of such information as front running.
Block trading facilities and block houses are specialized intermediaries that can facilitate block trades. Block houses are departments within brokerages that operate dark pools, private exchanges where large buy and sell orders can be matched out of public view. Block houses can also break up large trades on public markets to conceal the scope of additional supply, for example by placing numerous iceberg orders.
Block Trade Example
A hedge fund wants to sell 100,000 shares of a small-cap company near the current market price of $10. This is a million-dollar transaction on a company that may only be worth a few hundred million, so the sale would probably push down the price significantly if entered as a single market order. Moreover, the size of the order means it would be executed at progressively worse prices after exhausting demand at the $10 asking price. So the hedge fund would see slippage on the order and the other market participants might pile on, shorting the stock based on the price action and forcing the price down further.
To avoid this, the hedge fund can contact a block house for help. Block house staffers would break up the large trade into manageable chunks. For example, they might split the block trade into 50 offers of 2,000 shares, each posted by a different broker to further disguise their origin.
Alternatively, a broker could find a buyer willing to buy all 100,000 shares at a price arranged outside the open market. This would typically be another institutional investor.
What You Need to Know About Block Trades
Block trades are large trades made between two parties.
Block trades are a convenient way of buying or selling a sizable amount of cryptocurrency.
Binance P2P is a secure platform that lets you quickly buy or sell large amounts of Bitcoin and other cryptocurrencies with verified block merchants.
Looking to buy or sell a large amount of crypto? Learn more about block trades and how you can safely trade crypto in bulk according to your preference.
Block trades are large trades with a fixed price made between two parties. In traditional markets like the stock exchange, block trades involve 10,000 shares or more. However, this type of trading isn’t exclusive to equities. Cryptocurrency traders often rely on block trades to offload or buy large amounts of Bitcoin or other cryptocurrencies. The fundamentals for crypto and stock block trades are similar. Find an experienced third-party intermediary and set an agreed price and amount you want to buy or sell.
If you’re interested in making a large crypto transaction, try Binance P2P , the number one crypto peer-to-peer (P2P) marketplace worldwide. We offer a secure platform that lets you quickly buy or sell large amounts with verified block merchants in more than 300 payment methods and 70 local currencies. Get started by creating a Binance account , or you can read on to learn more about block trades, how to place them and how to become a block merchant.
Block Trade Pros and Cons
As mentioned before, block trades are a convenient way of buying or selling a sizable amount of cryptocurrency. However, block trades may not be suitable for your trading needs. To give you a closer look, we’ve outlined a complete list of the advantages and disadvantages of block trades below.
Minimize slippage: If you try to make a large transaction on the Spot market, there’s a high probability you’ll encounter problems like slippage. For example, you set a sell order at $8, but only a few buyers match your order. This results in your trade slipping in value and selling at a lower price than desired.
Low fees: With peer-to-peer marketplaces like Binance P2P, you can easily make large-volume crypto trades with low fees.
Preference: Peer-to-peer marketplaces let you trade on your terms, with your preferred payment method and local currency. At Binance P2P , you can choose from more than 300 payment methods and 70 local currencies.
Security: Due to the P2P nature of block trades, it’s vital that you transact on a trusted platform with an experienced block trade merchant. You don’t want to get caught trading with scammers , malicious parties or fraudulent platforms. Fortunately, user security is a top priority at Binance P2P. Our marketplace provides strictly-vetted verified merchants, industry-leading escrow service and a responsive customer service team in the event of a dispute or an appeal.
Capital tie-up: The last thing you want to happen is a significant market movement in the middle of your block trade. You agree to a fixed price, but the market suddenly moves drastically, and now your funds are tied up. Every trade on Binance P2P lets you easily contact and communicate with your trading counterparty, ensuring a smooth and fast transaction.
Trade Bitcoin on the Binance P2P Block Trade Zone
Now that you understand the fundamentals of block trades, here are the steps to making your first block trade on Binance P2P . For those already experienced with block trades, you can read our requirements to become a verified merchant on Binance P2P.
How to place a block trade order?
There are different ways you can find block trade ads on our marketplace homepage: create a search filter or visit our Block Trade Zone.
Please note: Block trade orders require at least an equivalent value of $50,000 US dollars.
Block Trade Zone: Binance P2P has three different trading zones on the mobile app: Express, P2P, and Block Trade. You can click the [Block Trade] zone to view all available block trade ads in your local currency.
Please note: P2P Block Trade zone is currently available in RUB, EUR, INR, HKD, NGN, VND, PHP and IDR markets.
Create search filter: Press the filter icon on the top right of the P2P homepage to only show ads from verified merchants. In this section, you can also filter by payment method and amount of currency.
Now that you’ve filtered your homepage, you’ll be able to identify block trade merchants by the purple diamond next to their username. Click on their ad posting and complete the trade. Enter how much you want to sell or buy, then select from the available payment methods.
If you’re a seller, make sure the funds have reached your payment method before releasing crypto assets. For buyers, ensure you promptly send the funds to your counterparty’s payment method. For problems or disputes, file an appeal , and a customer service agent will contact both parties to resolve the issue. If you need more information, read our block trade how-to guide .
How to become a block trade merchant?
We’re always looking for experienced block trade merchants at Binance P2P. Here are the requirements below:
High volume order on average.
Able to pay a sizeable one-time security deposit.
Clear a Due Diligence check from our risk and merchant management team.
As a verified block trade merchant, you’ll get exclusive benefits such as 24/7 one-on-one support, verified badges, VIP discounts, better trading tools and a more robust ad management interface.
Start Trading on Binance P2P
Create your Binance account, download the mobile app and complete identity verification. Once your account is verified, you can start trading popular crypto like Bitcoin in bulk with low fees on Binance P2P.
Further Reading
Disclaimer: Your use of Binance P2P services and all information and other content (including that of third parties) included in or accessible from Binance P2P services is at your sole risk. Our only responsibility is to handle crypto transactions. All payments are final upon completion unless otherwise required by law. The Binance P2P platform has neither the right nor obligation to resolve any disputes arising from a completed payment. Neither the Binance P2P platform nor merchants shall be responsible for your loss in a completed payment.