Why block trading happens after hours

Block trading often takes place after hours for several reasons:

1. Market Impact Reduction: By conducting block trades outside of regular trading hours, institutional investors can reduce the market impact of their trades. Large trades during regular market hours can disrupt the price and potentially affect other market participants. Post-market trading allows for the execution of large orders without causing significant price fluctuations.
2. Liquidity and Efficiency: After-hours trading provides a means for investors to access liquidity when the primary market is closed. It allows for the execution of trades that might not be possible during regular trading hours due to a lack of buyers or sellers. This increases the efficiency of the trading process.
3. Private Negotiations: Block trades are often privately negotiated, which gives investors the opportunity to negotiate prices and terms outside the public eye. This can be advantageous, especially for large trades that might be more sensitive to public scrutiny.
4. Regulatory Compliance: After-hours trading can be an effective way for institutional investors to execute large trades without triggering regulatory requirements that might apply during regular trading hours. This can include reporting obligations and disclosure rules that are less stringent during off-hours.
5. Strategic Trading: Investors may strategically time their trades to take advantage of market conditions or to align with corporate events, such as earnings releases. After-hours trading allows for the execution of trades in response to such events.

In conclusion, block trading after hours is primarily driven by the need to reduce market impact, enhance liquidity and efficiency, facilitate private negotiations, comply with regulatory requirements, and exploit strategic trading opportunities.