stocks

Block trading

Written by cool

Block trading

 

Block trading is a block transaction whose subject is a security that is traded on the stock exchange or over-the-counter market. A block transaction is a transaction agreed outside the stock exchange meeting at which the prevailing price method or the continuous trading method is traded, in a bilateral relationship between one buyer and one seller, and according to the conditions prescribed by the Belgrade Stock Exchange Rules. All securities and financial instruments traded in stock exchange and over-the-counter trading, except futures and options, may be subject to a block transaction.

If the subject of the block transaction is a security traded by the prevailing price method, the block transaction may be concluded if certain conditions are cumulatively met. The first condition is that at least one member of the Exchange submits at the same time a purchase order and a sale order for the same security, in the same quantity, at the same price and with the same settlement date. Then, it is important that the amount of securities from the block transaction is at least equal to the sum of the traded volume of the given security at the last three stock exchange meetings, and at least 3% of the total number of issued securities issued, excluding the traded quantity at the stock exchange meeting transaction block.

In case the subject of the block transaction is a security traded by the method of continuous trading, the conditions of the block transaction must also be met in order for it to be concluded. In relation to trading by the prevailing price method, it differs in the value of the block transaction, and it can alternatively be at least 200 million dinars, if the subject of the block transaction is shares, or 10 million dinars, if the subject of the block transaction is a debt security. is 10% of the total number of issued securities of the same type and the same class, issued by the issuer in question. The next condition is that the maximum deviation of the price of the security from the block transaction in relation to the closing price at the previous stock exchange meeting can be up to 3%, except in the case when the quantity of securities in the block transaction is at least 10% of the total number of issued securities of the same type and class of the subject issuer, when the price difference of up to 5% is allowed. Another very important condition is that the quantity of securities from the block transaction cannot be bought or sold at the price from the block transaction during the stock exchange meeting during which it is submitted to the Stock Exchange for approval and registration.

The seller’s broker initiates a block transaction in Belex by entering all elements of the transaction in the block trading order, except for the buyer’s data, and the latter refers the buyer’s broker for confirmation. Confirmation of a block transaction by the buyer’s broker is considered the entry of the required data on the buyer and submission of the thus confirmed block transaction to the Exchange within 15 minutes from the moment when the seller’s broker sent the buyer’s broker a block transaction for confirmation. Confirmation of a block transaction by the buyer’s broker must be performed at the same stock exchange meeting at which the seller’s broker initiated the block transaction, and no later than the time determined by the stock exchange calendar. The Exchange official authorized by the Exchange Director approves, ie, does not approve the block transaction within 60 minutes from the time when the confirmed block transaction was submitted to the Exchange by the buyer’s broker. If the Exchange official approves the block trading, the block transaction is concluded and the conclusion is made.

Prices and volume of turnover from approved block transactions do not affect the prices and volume of turnover realized in trading in securities at the stock exchange meeting, nor do they affect the value of the index in which the given securities are included.

Observed by trading methods in 2007, trading blocks are in third place, with a turnover of 13.4 billion dinars.