Introduction to Block Trading
Block trading involves negotiating and executing large-asset trades outside the public order book. It is commonly used to reduce slippage, minimize market impact, and protect trading intent.
Concepts and uses
Block trading refers to large buy or sell orders completed through private negotiation outside the public order book. Institutions, funds, and traders who need to process large orders at once often use it to avoid adverse price movements triggered by publicizing the order, while also making trading costs easier to estimate.
Basic process
The trader first determines the asset, direction, size, and settlement terms, then requests a quote from a liquidity provider or over-the-counter trading desk. The quote may be firm or indicative and typically references the current market price with a premium or discount added. After accepting the quote, the trade is executed privately, followed by confirmation and settlement.
Difference between OTC trading
Block trading and OTC trading may both bypass the public order book, but they have different emphases.OTC trading broadly refers to trades negotiated outside the public order book; block trading places greater emphasis on order size and a structured process. Therefore, not every OTC trade is a block trade.
Original Tutorial
https://www.binance.com/zh-CN/academy/glossary/block-trade
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