Block Order

A block order is a large number of securities being bought or sold at the same time.

Block orders usually have at least $200,000 in market value or 10,000 shares of the same fixed income securities. The trader enters the order into a special system and the securities can be sold in smaller batches. A weighted average is then calculated from the prices of the securities sold.

Let’s say Jill Sellsalot is the portfolio manager for a large university’s retirement plan. They hold 40,000 shares of Microhard, Inc. in a variety of different accounts, and decide to sell them all as a block order for needed cash. Jill uses a block house firm, where Jack Trader will sell the shares in various quantities over a period of time. A weighted average is then calculated from all the sales, and reported back to Jill as the proceeds to record in all her different accounts. And, uh...that's the real story of Jack and Jill.