Download what is the “upstairs market?” the causes of market impact for block

WHAT IS THE
“UPSTAIRS MARKET?”
The upstairs market is a network
of broker trading desks and
institutional investors where
block trades are matched. Unlike
trades that are paired at an
exchange (or ATS), these trades
are typically negotiated via
phone. Once a trade has been
consummated it is “printed” on a
marketplace. In order for brokers
to source liquidity for their clients’
trades, they distribute details of
those orders via phone calls and
electronic indications of interest.
THE CAUSES OF MARKET IMPACT
FOR BLOCK TRADES
There are four main causes of market
impact that institutions should be
concerned about:
Information leakage from
brokers or other market
participants using indications
of interest, phone calls, and other
communications
Posting oversized orders as a
form of advertisement for a
broker
Block traders sweeping the
market to put up a print outside
of the current protected
spread.
Brokers aggressively working
orders to seek liquidity causing
the price move against you.
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ON A DIFFERENT SCALE