A block trade is a large, privately negotiated securities transaction that is settled over-the-counter. They are common among institutional investors, hedge funds and high-net-worth individuals deploying significant capital. When executing large orders on exchanges, traders risk impacting the market and causing price slippage. Alternatively, via private negotiations, they can predetermine a settlement price by requesting-for-quote from a market maker.
What is an RFQ?
A request for quote, or RFQ, is an electronic notification sent to market makers expressing their intention to trade a specific instrument or strategy. Market makers will be alerted once an RFQ has been sent and will be prompted to quote a bid and ask for the requested strategy.
What is the minimum size of a block trade?
The minimum notional size for a block trade is US$50,000 or equivalent.