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The sketchy world of Block Trades - General Discussion - Corner of Berkshire and Fairfax - The Value Investor's Haven

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Matt Levine hit it out of the park today. I've already posted separately his thoughts on Grayscales post ETF decline, the game theory behind Elon's demand for more Tesla shares. This is more inside baseball but I found his discussion of how block trades work on wall street fascinating, and why the head of block trading at Morgan Stanley got a light slap on the wrist from the SEC for inside trading (sortof?) clients while Morgan Stanley got hit for a quarter billion in fines/restitution. Here’s a simple model of a block trade. There’s a public company, its stock trades on the exchange, its current price is $100. A big shareholder wants to sell a block of a million shares. This will drive down the price: supply and demand, more sellers than buyers, etc. Let’s say that fully selling all of the shares will drive the price down by $3. You’re a bank, and the seller comes to you and says: “I want to do a block trade. I want you to buy all this stock at a firm price and resell it at your own r

ValueArb Posted January 16, 2024 ValueArb Member 1.7k Posted January 16, 2024 (edited) Matt Levine hit it out of the park today. I've already posted separately his thoughts on Grayscales post ETF decline, the game theory behind Elon's demand for more Tesla shares. This is more inside baseball but I found his discussion of how block trades work on wall street fascinating, and why the head of block trading at Morgan Stanley got a light slap on the wrist from the SEC for inside trading (sortof?) clients while Morgan Stanley got hit for a quarter billion in fines/restitution. Quote Here’s a simple

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