Block trade, as the name suggests, is an exchange of a fixed number of securities at an agreed price between two parties. The number of securities to be traded is significantly larger than ordinary trade deals. In a block trade, a single purchase or sale of a stock involves 10,000 or more shares. In a nutshell, block trade is done with an intent of investing.
Points to remember:
If in case, the block trade is conducted in an open market, traders need to be careful with the trading as it might cause major fluctuations in terms of volume, and can also impact the market value of the bonds or shares that are being purchased.
The block trades are generally conducted with the help of an intermediary known as a Block House.
Block trades are known to be more difficult compared to others as it exposes the broker/dealer to more risk.