Posted in Finance, Accounting and Economics Terms, Total Reads: 368
Definition: Upstairs Trade
Upstairs Trade is a type of off-board trading i.e. trading that occurs without the use of exchange like NYSE or NASDAQ. It takes place directly between parties thereby the transaction is kept private. The trade involves the stock listed on the exchange and usually involves off the record negotiations about pricings and terms and conditions.
Some exchanges prohibit such off the floor trades as it disturbs the price of the share available publicaly at the exchange. It prevents all the investors to know true value of securities being traded. The trade on the other hand may give out wrong sell or buy signals to the market. It may tank the stock make further transactions complicated.
Upstairs trade gives anonymity and may avoid destabilizing the markets if the transactions are very large and may be kept off record to avoid front running and large impacts on prices.