Glossary
Block trade
A single large trade, conventionally 10,000 shares or more, usually negotiated privately to limit market impact.
On this page
A block trade is an unusually large transaction in a single security, typically arranged between institutions rather than sent piece by piece to the open market. A long-standing rule of thumb treats 10,000 shares or about $200,000 of stock as a block, though for heavily traded large companies real blocks are often millions of shares. Blocks matter because moving that much stock through the public order book at once would push the price sharply against the trader.
How it works
A pension fund that wants to sell 2 million shares of a stock trading 5 million shares a day has two broad choices. It can split the order into many small pieces over hours or days, often with an algorithm. Or it can arrange a block: a bank's trading desk finds buyers, or takes the shares onto its own books, at a negotiated price. These negotiated trades happen "upstairs," away from the exchange floor, and are then reported to the consolidated tape.
Blocks may also execute in dark pools, which do not display orders before they trade.
What it signals
- Insider or sponsor selling. Founders, private-equity owners and venture funds often exit through blocks after an IPO lockup expires.
- Discount size. A wider discount suggests weaker demand for the stock.
- Tape prints. Traders watch for large prints during the day, though one big trade does not reveal whether the buyer or the seller initiated it.
A block is not necessarily bad news. Index rebalancing and routine portfolio shifts produce many.