"Understanding Block Trade Block trades typically involve a...

"Understanding Block Trade

Block trades typically involve a large numbers of equities or bonds being traded at an arranged price between two parties. They are sometimes done outside of open markets to lessen the impact on the security's price. A block trade involves at least 10,000 shares of stock, not including penny stocks, or $200,000 worth of bonds. Most block trades far exceed 10,000 shares.

Due to the size of block trades, both on the debt and equities markets, individual investors rarely, if ever, make block trades. They are usually carried out by hedge funds and institutional investors via investment banks and other intermediaries.

When block trades happen an open market, volume will fluctuate, affecting the prices of the shares or bonds being traded. Therefore, block trades are usually conducted through an intermediary, rather than the hedge fund or investment bank purchasing the securities normally, as they would for smaller amounts.

These intermediaries, or blockhouses, specialize in initiating large trades carefully, so as to not trigger a volatile rise or fall in the price of the security. Blockhouse staff traders have experience managing trades of this size. Staffers provide a blockhouse with special relationships with other traders and other firms that allow the company to trade these large amounts more easily.

When a large institution decides to initiate a block trade, it will reach out to the staff of a blockhouse, trusting they will collectively help obtain the best deal. Once an order is placed, brokers at a blockhouse contact other brokers who specialize in the specific type of security being traded, and the expert securities traders fill the large order through several sellers. This often involves iceberg orders that mask the actual volume of stock being moved."

Kind of gives a little insight as to why we have the likes of Pigsy posting BS incessantly doesn't it?