A massive, secretly negotiated securities transaction is referred to as a block deal.
Block trades are set up outside of open markets to limit their impact on the price of the security.
Hedge funds and institutional investors typically carry them out through investment banks and other middlemen, while high-net-worth authorized investors may also be permitted to take part.
A block trade is one involving at least 10,000 shares of stock or one valued more than $200,000, according to the New York Stock Exchange and Nasdaq.
These minimums are typically considerably exceeded in block trades.
On a stock exchange, a large-scale sell order could have a significant impact on the share price. The buyer will frequently receive a discount from the market price in a block trade that is negotiated privately, but other market players won’t be made aware of the additional supply until after the transaction has been publicly disclosed.
Block trades that have not yet been made public are regarded as important non-public information, and the self-regulatory body for the financial sector, FINRA, forbids the publication of such information as front running.