We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Block Order?

Malcolm Tatum
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Also known as a block trade, a block order is a trading order that is sufficiently larger than most standard size orders. Typically, a trade of this type must involve a minimum number of shares or amount to a minimum value of securities to qualify as a block order. There are several ways to structure this type of order or trade, with each method presenting certain benefits and disadvantages.

The most straightforward approach to a block order is to present the massive number of shares for immediate sale as a single trade. For example, an investor who wants to sell off ten thousand shares of a given security would execute an order to sell those shares as a block, meaning that one buyer will purchase all the shares offered. The benefit to this approach is that the seller receives compensation from the sale in one lump sum, rather than incremental returns from multiple buyers. A possible downside of this type of huge order to sell is that it could have a detrimental effect on the marketplace, especially if the shares are sold at a discount.

A different approach to a block order is known as the iceberg order. With this approach, the owners instructs a broker or agent to sell off a massive number of shares of the same security, but to offer the shares in smaller increments over a period of time. The idea here is to sell the shares in a manner that does not lead to mass speculation about some impending issue that would undermine the worth of those shares. By selling a few of the shares of the overall block order at a time, there is much less chance of adversely affecting the market value of the shares, or creating an fears that cause some degree of chaos in the market where the shares are traded.

There are situations in which an owner may want to sell off massive numbers of shares of a given security in a short period of time. This is sometimes the case when an unforeseen financial emergency has arisen, and the owner needs an immediate influx of cash to deal with that emergency. In circumstances of this type, the owner may instruct the broker to process the block order with an asking price that is below the current market value. Doing so effectively places the shares in the market at what is known as a blockage discount.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.