A pension fund manager wishes to purchase 400,000 shares of a large-cap Canadian bank without significantly increasing the current market price. Which of the following execution strategies would be most appropriate to minimize slippage?

Question

Accepted Answer

To minimize market impact and slippage, large institutional orders are often split into small child orders using algorithms like VWAP, or negotiated as a block trade 'upstairs' off the public exchange. This preserves the institution's cost basis.

A pension fund manager wishes to purchase 400,000 shares of a large-cap Canadian bank without significantly increasing the current market price. Which of the following execution strategies would be most appropriate to minimize slippage?

Discussion