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Block Sale

(Episode 5 here)

Nagpapahinga si Don Pepot at nagrerelax sa kanyang Olympic size pool ng dumating si Kiko at may sinabing balita.

Kiko: Senyor excuse me po pero nais ko lang ipaalam sayo na dumating na ang bagong order nyo na Benz.

Don Pepot: Magaling magaling! Sige e prepare mo at e tetest drive natin saglit.

10 Minutes Later

Nagtetest drive na si Don Pepot at Kiko sa bagong Benz ni Don Pepot.

Kiko: Senyor kagabe di ako agad makatulog. Ginawa ko nagbasa ako sa internet tungkol sa stock market.

Don Pepot: Talaga lang ha? Di ba puro lang ML ang ginagawa mo sa cellphone mo?

Kiko: Ah syempre senyor. Naniniwala kase ako sa kasabihan na ML is Life pero nagbasa ako sa stock market kagabe at may nabasa ako doon na di ko maintindihan.

Don Pepot: Ano yun?

Kiko: yung BLOCK SALE senyor.

Don Pepot: Ahhh yun ba. Imagine mo nasa palengke ka. May nagbebenta at bumibili ng kamatis. 40 pesos per kilo. May bumibili isang kilo o tatlong kilo. Ngayon, sabihin natin na dumating ka sa palengke at gusto mo bumili 900 kilos. Ano gagawin mo?

Kiko: syempre dederetso sa source mismo. Wholesale na yun eh. Kukunin ko yun sa presyong 35 per kilo.

Don Pepot: Tama. Ganun din sa stock market. Kapag may buyer ng isang stock na maramihan tawag dun block sale. A block sale is a pre-arranged transaction between a buyer and seller of a PSE-listed stock with pre-agreed volume and price, (Php20 Million or larger in gross value)submitted by their broker/s to PSE for approval, and executed by the PSE itself ‘off the board’, typically at prices away from prevailing market prices, and often involving deeply discounted commission rates for the brokers involved. There are PSE-set parameters as to how far block sales can be priced away from the prevailing market price. A block sale is one of the exceptional situations in which listed shares can change hands without being transacted ‘on the board,’ i.e. without subjecting the transaction to the mechanics of the PSE’s auction process. Almost like a private transaction as volume and price are agreed between the transacting parties beforehand and not dependent on the workings of the PSE’s open auction.

Kiko: So parang bultuhan na pagbili ng stock pala yun. Bakit hindi na lang idaan sa normal na pagbili ng stock? Bakit sa labas pa?

Don Pepot: katulad sa kamatis. Kapag bumili ka 900 kilos sa nagbebenta ng tingi tingi ano mangyayare?

Kiko: Mauubusan kamatis. Don Pepot: Tama. Magmamahal ang kamatis kapag konti na lang natira. Ganun din sa stock. Kapag dinaan sa normal na pagbili eh madidisturb ang normal na galaw ng presyo. Tsaka kapag sa labas makakadiscount ka since malakihan bili mo.

Don Pepot: in terms of price reduction, Regular block sale (20M) should just be +- 5% of the current last traded price. While Special block sale (minimum of 50) will have a different negotiation in terms of share price. If large enough a block sale buyer or seller can demand zero commission. You get only bragging rights.

Kiko: Sino gumagawa ng block sale senyor?

Don Pepot: Maperang buyer. The buyer and the broker have to tell their broker. The broker that will do the cross, is decided by either buyer or seller or the brokers. Because of the nature of the cross, one broker has to do all the paperwork of getting PSE approval.

Kiko: Ang galing pala. Kapag pala marami ka pera pwede ka makadiscount. Senyor, pwede ba mag advance ng sahod ko.

Don Pepot: Ang galing ng style mo me pa tanong tanong ka pa uutang ka lang pala.

Kiko: Hehe

Abangan….

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