Squawk Box - Explained
What is the Squawk Box?
Written by J. Mance Gordon
Updated at April 23rd, 2024
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What is the Squawk Box?
A squawk box refers to the speaker of an intercom or a public-address system used on trading desks to broadcast information. Squawk boxes are commonly found at brokerage firms and investment banks to broadcast information relating to trades. A firms analysts use the squawk box to communicate with brokers, especially when essential information needs to be passed across about a particular trade.
How is a Squawk Box Used?
A squawk box is a line of communication that a brokerage firm must maintain in order to receive updates about trading blocks and the market in general. Information received to guide the brokers trading. Analysts play important roles in stock brokerages or brokerage firms and investment banks. While at the trading desks, analysts make observations and extract information about the market that they need to communicate efficiently to the brokers of the firms they work for. The squawk box is a communication enhancement tool used by analysts to pass information about market events, block trades and also communicate their findings and recommendations to brokers.
Squawk Box and Analyst Recommendations
The squawk box is quite different from other sophisticated forms of communication, it is a loudspeaker or an intercom system used by investment banks and brokerages as their public address system. Many brokers gather around a squawk box to have a clear picture of block trades and know current trading patterns as suggested in the analysts recommendations. The recommendations given by analysts on trading include buy, sell or hold orders, depending on the trends in the market. Analysts also give ratings and recommendations after in-depth research of public financial statements, and qualitative analysis using a discounted cash flows (DCF) model.
Squawk Box and Block Trades
A squawk box helps a brokerage firm or investment bank get a hold of the current block trades, a firms analysts communicate the block trade to brokers using the squawk box. A block trade refers to the sale or purchase of a large number of securities, it is otherwise called block order. Most block orders include orders for 10,000 or more shares and are executed outside of the open markets. Investment banks and brokerage firms must be in the know of block trades and also know who is placing the order.