Definition
Crossing / Negotiated Deal
A 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.
Indian institutions use the block-deal and bulk-deal windows to execute large trades at negotiated prices within exchange-defined bands, reporting them to the exchange for transparency. This lets a fund buy or sell a substantial stake with a counterparty without sweeping the order book and causing heavy market impact.
Block deals occur in a special window with minimum size and price-band rules, while bulk deals (above a threshold of a stock's traded quantity) must be disclosed. These mechanisms complement execution algorithms as a route for handling size, especially when a single counterparty is available.
Related terms
- Execution AlgorithmAn execution algorithm is a program that works a large parent order into many smaller child orders over time to minimise market impact and achieve a target benchmark such as VWAP or the arrival price.
- 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.
- Block DealA 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.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.