![\"Jim](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/07\/jim-toes.jpeg\")
Jim Toes<\/p>\n(FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.)<\/p>\n
In today\u2019s equity markets, block trading is evolving fast, shaped by technology, shifting buy-side priorities, and a much more volatile trading environment.<\/p>\n
Jim Toes<\/p>\n
\u201cThere\u2019s still a real need for block trading,\u201d said Jim Toes, President and CEO of the Security Traders Association. <\/p>\n
He said that consolidation within the asset management industry has led to fewer but much larger asset managers\u2014as measured by AUM. <\/p>\n
\u201cPortfolio managers managing large positions in single stocks will always have a need for trading in block size,\u201d he told Traders Magazine.<\/p>\n
That need hasn\u2019t gone away, but how blocks get executed, and what buy-side desks expect from the experience, looks very different than it did even a few years ago. <\/p>\n
\u201cBecause of innovation and technology,\u201d Toes explained, \u201clarge buyers and sellers who historically traded in one block, at one price, at one point in time, are now able to meet and have their trades matched off against each other in smaller sizes over the course of the day with parameters.\u201d<\/p>\n
Those parameters\u2014ranging from acceptable price ranges to volume limits and time constraints\u2014are now as important as the size of the order itself. That shift reflects a bigger change: for many on the buy-side, efficiency has overtaken scale as the top execution priority.<\/p>\n
\u201cThe ability to source natural liquidity\u2014not just large blocks\u2014is very much on the buy-side\u2019s mind,\u201d said Jesse Forster, Head of Equity Market Structure & Technology at Coalition Greenwich. \u201cIt doesn\u2019t have to be block-sized anymore. The focus is on finding liquidity efficiently, whether it\u2019s block or not.\u201d<\/p>\n
According to Forster, over half of the buy-side prioritizes sourcing natural liquidity while their appetite for capital commitment from traditional sell-side banks has faded. \u201cThat doesn\u2019t mean they don\u2019t want block liquidity\u2014but they\u2019re exploring new avenues to get it.\u201d<\/p>\n
Historically, a bank could take on risk by filling a large order and managing the impact afterward, often smoothing losses through commissions or longer-term relationships. But today\u2019s constraints\u2014regulatory, risk-based, and economic\u2014make that less feasible. As Forster described: \u201cThe banks don\u2019t have the flexibility they once did. And the buy-side doesn\u2019t necessarily want to create competition for themselves by dealing with someone who immediately has to unwind in the same direction.\u201d<\/p>\n
He said that market makers and single-dealer platforms (SDPs) are stepping into roles once dominated by banks. Moreover, these SDPs are natively electronic and can integrate more seamlessly into buy-side workflows. \u201cIf I can send a larger order to a market maker and have them fill me at the current market price, that\u2019s much easier than slicing it up, figuring out which algos to use, and managing executions over time,\u201d Forster pointed out.<\/p>\n
He further said: \u201cThe buy-side is viewing liquidity differently. Finding a block isn\u2019t the benchmark anymore. It\u2019s about accessing liquidity without market impact, even if that means trading in smaller, more dynamic increments.\u201d<\/p>\n
![\"Jesse](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/07\/Jesse-Forster-original-color.jpg\")
Jesse Forster<\/p>\n
Looking ahead, Forster believes the focus will shift further away from the\u00a0who\u00a0and more toward the\u00a0how\u00a0of execution. \u201cWe might not be that far from a future where trading is more about the technology than the counterparty,\u201d he said.<\/p>\n
The Execution Management Systems (EMS) of the future will do far more than route orders\u2014they\u2019ll optimize them intelligently. \u201cEventually, the EMS will know which broker has the best performance in a name, who we owe research payments to, which strategies to use, what time of day is optimal, and more,\u201d Forster said. \u201cAll those manual decisions a trader makes today\u2014many of those will be automated.\u201d<\/p>\n
This applies to block trading as well: \u201cThe choice of venue and routing method will be technology-led,\u201d he said.<\/p>\n
Forster added the ultimate winners will be those who best serve the buy-side\u2019s evolving needs. \u201cTechnology is moving fast. The buy-side wants smarter access, not just more access. Whoever can deliver that\u2014banks, market makers, platforms\u2014will take the lead.\u201d<\/p>\n
Toes agreed: \u201cBlock trading is about finding liquidity under the standards of best execution with minimal price impact. Whatever approach the buy-side takes will be guided by those primary goals.\u201d<\/p>\n
But if execution workflows are evolving, so too are the market conditions that influence them. Jeff O\u2019Connor, Head of Equity Market Structure for the Americas at Liquidnet, emphasized that appetite for block trading is cyclical\u2014not permanently fading.<\/p>\n
\u201cBlock appetite is dictated by conditions,\u201d he said. \u201c2024 was a near-perfect backdrop\u2014real price volatility was down, correlations were low, and U.S. macro readings and corporate results were solid.\u201dJust before the turn of the calendar year, the Fed pivoted on their interest rate message, becoming more hawkish, and the cloud of uncertainty was coming in regarding inflation, and in particular, the variable of tariff induced pressure, he said.\u00a0\u00a0<\/p>\n
\u201cSo almost perfectly with the turn of the year conditions shifted considerably.\u00a0Namely, higher risk variance in trading.\u00a0Average trade sizes drop, spreads widen, depth of book depletes, and real price volatility is spiking,\u201d he said.\u00a0\u00a0<\/p>\n
Overall, a much more difficult environment for traditional fundamental asset managers to get in and out of positions, and do so with conviction,\u00a0 O\u2019Connor said.<\/p>\n
\u201cWhen variance is high, so is the fear of adverse selection, and block appetite drops,\u201d he said.<\/p>\n
In these environments, traders often shift toward schedule-based algorithms. \u201cWhen variance rises, so does the use of schedule based algos.\u00a0 While presenting somewhat of a callus around the fear of picking a price in time block, the tactic also suffers from severe underperformance or outperformance as sharp mis-directions and volume bursts make the trade fallible as well,\u201d O\u2019Connor noted.<\/p>\n
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Jeff O\u2019Connor<\/p>\n
In the current environment, close to 45% of total market volumes are sourced from non-bank market makers\/HFT, according to O\u2019Connor.\u00a0<\/p>\n
He said that these counterparties flourish at both exchanges and\u00a0 ATS\u2019s.\u00a0\u00a0<\/p>\n
\u201cPerformance metrics need to be closely watched, but moving from blockier trading to fragmented small-sized child orders does change the makeup of the contra and that is not always seen as attractive,\u201d he said.\u00a0\u00a0<\/p>\n
\u201cBut the natural procession to a more spread-out trade, along with a mixing shift of liquidity sources, is dictated by market conditions, rather than a secular shift away from a particular method of trading,\u201d he emphasized.<\/p>\n
There\u2019s also a strategic value to blocks that\u2019s often overlooked: they help take risk variance out of the trade, O\u2019Connor said, adding that these same tough conditions existed in 2022 into 2023 as uncertainty brought high levels of trepidation for traditional asset managers.\u00a0\u00a0<\/p>\n
\u201cThat continuous institutional flow is a key metric in improving both spreads and depth. When correlations are high, as they have been for most of 2025, stocks are trading in lock-step, and it isn\u2019t a ripe environment for a fundamental manager to stand out on individual bets,\u201d he said.\u00a0<\/p>\n
\u201cAs the macro setting comes better into scope, apprehension drops, and those flows become more consistent \u2013 improving overall conditions.\u00a0When a Trader\/PM has that conviction in their trade, the block becomes the most attractive way to execute and provide little signal to the market that they are getting into or out of that position,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"(FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading…\n","protected":false},"author":2,"featured_media":35916,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[28,112],"class_list":{"0":"post-35915","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-markets"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/35915","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=35915"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/35915\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/35916"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=35915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=35915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=35915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}