DEFINITION of 'Block Positioner'

A block positioner is a securities dealer who will take either a long or short position in order to accommodate a seller or buyer of a large block of securities. The dealer takes on the risk of the securities in order to help clear the trade for the seller. Block positioners aim to unload the position quickly, and typically hedge their risk exposure with options, or by selling the securities short.

Traditionally, prime brokers have played the role of block positioner, agreeing to commit capital to their clients (such as hedge funds) in order to facilitate block trades for them, although a few other broker-dealers have also carved out a niche in executing block trades.

BREAKING DOWN 'Block Positioner'

Block orders are large orders in the underlying security that a client seeks to execute in its entire size. Typically a block order is for more than 10,000 shares of stocks, or more than $200,000 worth of bonds. Because of their large order size, these trades may artificially move the market, or market participants who get wind of the desire to trade a large block may front-run the order, to the block trader's detriment. Therefore, If a block trade is attempted in the open market, traders must be careful. Therefore, block trades are usually conducted through an intermediary, known as a block positioner, rather than a hedge fund or investment bank purchasing the securities normally, as they would for smaller amounts.

Sometimes, the block positioner can be an inter-dealer broker (IDB), who takes an agency role and tries to cobble together a group of counterparties each of which are willing to participate in some portion of the block trade, but without committing any capital. This is especially relevant in options markets where a trader may seek to buy or sell thousands of contracts. Other times, the block positioner is a client's prime broker (usually an investment bank or large financial firm) who will agree to take down the entire trade at once. Sometimes, these trades will be executed through dark pools or ECN matching systems so not to disrupt the regular market activity by introducing a large trade. Sometimes, a prime broker will ask a specialized block positioner situated on the floor of a stock exchange, known as a wholesale broker, to "cross" a large number of shares of stock at a pre-determined price, wich may be different from the current market price. Often, these wholesale brokers will operate on "away exchanges" such as the Chicago Stock Exchange or Philadelphia Stock Exchange.


Block positioners can take on considerable risk in exchange for the profits they seek. Any firm involved in block positioning must register with the Securities and Exchange Commission (SEC) and also with the New York Stock Exchange (NYSE) if it is a member firm. Under Rule 15c3-1 for market makers, block positioners must have minimum available capital of $1 million and meet other conditions while unloading the securities block.

  1. Block

    A block is a large amount of the same security bought or sold ...
  2. Orphan Block (Cryptocurrency)

    Orphan blocks are valid blocks that are rejected from the blockchain ...
  3. Block Height

    Block Height indicates the overall length of a blockchain.
  4. Block Reward

    Bitcoin block rewards are the new bitcoins that are awarded by ...
  5. Uncle Block (Cryptocurrency)

    Uncle blocks are orphan blocks on the Ethereum network, and miners ...
  6. Blocked Period

    Blocked period refers to a length of time in which an investor’s ...
Related Articles
  1. Tech

    Bitcoin Blockchain Stopped Producing Blocks for Hour, Price Climbed 4%

    The BTC blockchain stopped the production of blocks for 64 minutes earlier this week, to unexpected results.
  2. Tech

    How Bitcoin Works

    Miners, hashes, keys, cold storage, blocks - it's confusing. We can help you understand how bitcoin works.
  3. Investing

    H&R Block: 3 Reasons Buffett Should Buy Back In

    Buffett may have moved on from HRB, but there are three strong reasons he might want to take another look.
  4. Investing

    AT&T Rolls Out Spam Blocker For Mobile Phone Customers (T)

    AT&T is rolling out a new call blocking feature to prevent spam on mobile phones.
  5. Investing

    H&R Block Offers Interest-Free Loans to Tax Filers

    The Financial Industry Regulatory Authority, or FINRA, has deemed tax refund anticipation loans as being akin to payday loans. Many tax preparation companies offer filers the option of receiving ...
  6. Tech

    What is a Distributed Ledger?

    Blockchain technology has come a long way from the obscure corners of the web it was once confined to. But what is it? And what about nonces, hashes and ledgers?
  7. Trading

    An Introduction To Securities Markets

    The global securities market is constantly evolving. Discover the most popular market structures currently in use.
  8. Investing

    What Is a Broker-Dealer and Why Should You Care?

    Before deciding who to use for help with your investing, learn what brokers, dealers, and broker-dealers are and what services they provide.
  9. Tech

    Bitcoin vs. Bitcoin Cash: What's the Difference?

    We break down the difference between bitcoin and bitcoin cash, and what it might mean for the future of cryptocurrencies.
  10. Trading

    What is the Difference Between the two?

    The differences between retail and institutional traders lie in the size of the trade, level of sophistication, and the speed of transactions.
  1. How does a block chain prevent double-spending of Bitcoins?

    Find out how double-spending is prevented in the Bitcoin server and how transactions are posted and verified on the Bitcoin ... Read Answer >>
  2. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
  3. The difference between a market order and limit order

    Market orders execute a trade to buy or sell immediately at the best available price. A limit order only trades when the ... Read Answer >>
Trading Center