blockkauppojen

Blockkauppa is a Finnish term that translates to "block trade" or "block transaction" in English. It refers to a large-scale trade of securities, such as stocks or bonds, that is executed away from the public exchange. These trades are typically negotiated directly between two parties, often involving institutional investors like pension funds, mutual funds, or hedge funds, and a broker-dealer.

Block trades are distinguished by their size, which is significantly larger than typical retail trades. The exact threshold for what constitutes a block trade can vary depending on the specific market and security, but it generally involves a substantial number of shares or a large monetary value. Because of their size, block trades are often executed privately to avoid significantly impacting the public market price.

Executing block trades away from the public exchange helps to minimize price volatility. If a large order were placed directly on an exchange, it could signal strong buying or selling pressure and cause the price to move unfavorably for the party placing the order before the entire block could be filled. By negotiating privately, parties can agree on a price that is acceptable to both, often at a midpoint between the current bid and ask prices on the exchange.

Block trades are usually facilitated by broker-dealers who act as intermediaries. They may find a counterparty for the trade or use their own capital to take one side of the transaction. This process requires expertise in market making and risk management. The anonymity and price discretion offered by block trades make them a valuable tool for large investors looking to enter or exit significant positions efficiently.