Block House

AAA

DEFINITION of 'Block House'

A brokerage firm with the primary focus of locating potential buyers and sellers of large trades. A block house typically deals with institutional clients rather than individual investors, since each transaction represents millions of dollars. Examples of institutional clients include mutual funds and pension funds that assume significant security positions. Because of the nature of block house firms, their trading activity can have a considerable effect on the financial markets. Block trades are generally considered to be those dealing with more than 10,000 shares of stock (excluding penny stocks), or any other trade that involves a high monetary value.

INVESTOPEDIA EXPLAINS 'Block House'

A brokerage firm is a company that acts as an intermediary between buyers and sellers to facilitate transactions. The buyers and sellers must pay commissions and other transaction fees in exchange for the brokerage firm's assistance in executing any trades. A block house is a type of brokerage firm that deals primarily in large trades, with clients ranging from corporations and banks to insurance firms and academic funds. Some investors and analysts try to follow the money or stay ahead of market trends by watching block trade activity. Institutional investors sometimes trade large blocks of securities directly, to avoid brokerage commissions, in a practice called fourth market.

RELATED TERMS
  1. Bagging the Street

    An investor's failure to avoid trading in the stocks that are ...
  2. Block Order

    A signficant order placed for sale or purchase of a large number ...
  3. Basket Trade

    An order to buy or sell a group of securities simultaneously. ...
  4. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  5. Broker

    1. An individual or firm that charges a fee or commission for ...
  6. Block Trade

    An order or trade submitted for sale or purchase of a large quantity ...
Related Articles
  1. Fundamental Analysis

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  2. Fundamental Analysis

    Introduction To Institutional Investing

    Investopedia explains: Learn about institutional investing and all of the major players in this field.
  3. Fundamental Analysis

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.
  4. Brokers

    Uncovering The Securities Firm

    Learn about the various departments of a securities firm and the professionals who make it work.
  5. Options & Futures

    Brokers and Online Trading

    How do you find the right broker for your investment needs? Start by reading our broker tutorial.
  6. Investing Basics

    What is the difference between a REIT and a real estate fund?

    A real estate fund invests in securities offered by public real estate properties directly or indirectly through Real Estate Investment Trusts (REITs).
  7. Mutual Funds & ETFs

    Can you invest in hedge funds?

    Read about what it takes to invest in a hedge fund, and learn how some investors find ways to indirectly capture a hedge fund's returns.
  8. Mutual Funds & ETFs

    What happens if you don't hedge your investments?

    Learn the purpose, advantages and disadvantages of hedging, and find out how to utilize hedging to enhance an overall investment portfolio.
  9. Economics

    Gary Gordon Positions Your Portfolio For 2015

    Seeking Alpha, the popular financial web portal, interviews Gary Gordon for its Positioning for 2015 series. Here is a transcript of that exchange.
  10. Mutual Funds & ETFs

    What is standard deviation used for in mutual funds?

    See how standard deviation is helpful in evaluating a mutual fund's performance. Use it in combination with other measurements to find a good investment.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center