Definition
Block Deal
A block deal is a large, single transaction of shares executed in a dedicated exchange window at a negotiated price within a permitted band, designed for institutions to trade size efficiently.
Indian exchanges run block-deal windows (a morning and an afternoon session) with a minimum order value and a price band around a reference price. Trades in this window are matched on an order-to-order basis and disclosed, giving transparency while sparing the regular order book from a large, market-moving order.
Block deals are how promoters, private equity and large funds transfer big stakes, often as part of a crossing arranged in advance. They reduce the market impact and information leakage that working such size through continuous execution algorithms would cause, though the price band limits how far from market the deal can be.
Related terms
- Bulk DealA bulk deal is a trade, or set of trades by a client, in a single stock that exceeds a threshold percentage of the stock's total traded shares in a day, requiring disclosure to the exchange.
- Market ImpactMarket impact is the adverse price movement caused by the act of trading itself, where a large buy pushes the price up and a large sell pushes it down as the order consumes available liquidity.
- Best ExecutionBest execution is the obligation on a broker or fund to take all reasonable steps to obtain the most favourable terms for a client's order, considering price, cost, speed, likelihood of execution and settlement.
- Crossing / Negotiated DealA crossing or negotiated deal is a large transaction arranged off the continuous order book and reported to the exchange, used to move big blocks without disrupting the public market.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.