Upstairs Trade

AAA

DEFINITION of 'Upstairs Trade'

A buy or sell transaction for an exchange-listed stock that is not executed through an exchange. The upstairs trade is executed with different terms and pricing than would be available through the exchange. Some exchanges do not allow upstairs trading. The trade does not occur on the trading floor but in a separate location.

INVESTOPEDIA EXPLAINS 'Upstairs Trade'

Upstairs trading, along with trading by dark pools and market makers, is a type of off-board trading. Off-board trading is criticized for allegedly depressing a security's public price as available through an exchange. In 2010, 30% of U.S. equities trading was off-board. These types of trades are typically large transactions that may be kept off the floor to avoid large price impacts or front running.

RELATED TERMS
  1. Exchange

    A marketplace in which securities, commodities, derivatives and ...
  2. Over-The-Counter - OTC

    A security traded in some context other than on a formal exchange ...
  3. Listed Security

    A financial instrument that is traded through an exchange, such ...
  4. Significant Order

    An order to buy or sell a security that, due to its abnormally ...
  5. Block Trade

    An order or trade submitted for sale or purchase of a large quantity ...
  6. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain ...
RELATED FAQS
  1. Will technology ever disrupt the role of the custodian bank?

    Custodian banks, along with other financial institutions that hold custodian accounts, are likely to be disrupted but not ... Read Full Answer >>
  2. What is the average range for the price-to-earnings ratio in the electronics sector?

    Investors purchase shares of company stock and other traded securities through capital markets in either primary or secondary ... Read Full Answer >>
  3. What are the benefits and shortfalls of the Herfindahl-Hirschman Index?

    Equity and debt are the two sources of financing accessible in capital markets. The term "capital structure" refers to the ... Read Full Answer >>
  4. What is the difference between open interest and volume?

    In the options market, two measurements describe the liquidity and activity of option contracts. Volume is the amount of ... Read Full Answer >>
  5. What is the difference between notional value and market value?

    The notional value and market value describe the amount of a security. The notional value is the total value of options, ... Read Full Answer >>
  6. What are the most effective ways to reduce moral hazard?

    There are a number of ways to reduce moral hazard, including the offering of incentives, policies to prevent immoral behavior ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Dirt On Delisted Stocks

    Listed securities are "the cream of the crop". Find out how a firm can lose that status and why you should be wary.
  2. Options & Futures

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  3. Investing Basics

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  4. Investing

    Too Late To Invest In EM?

    Investors have flocked to developing markets amid continued low U.S. interest rates & hopes of further economic stimulus from emerging world central banks.
  5. Investing

    How Nasdaq Makes Money

    NASDAQ provides a marketplace which offers money-making opportunities to investors. Investopedia explains how NASDAQ makes money.
  6. Investing

    How The NYSE Makes Money

    We examine how the New York Stock Exchange, the leading US stock exchange, makes money.
  7. Investing Basics

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
  8. Investing Basics

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  9. Mutual Funds & ETFs

    Which ETF is the Best Bet: VTI or IWV?

    A look at two quality ETFs that offer diversification, low expense ratios, and exposure to the total market.
  10. Economics

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center