Using block trades data on the Shanghai Stock Exchange (SSE) from 2003 – 2009, we study the pricing mechanisms of block buys and sells. We show that block trades are priced at discount (premium) for sells (buys). The discount/ premium varies depending on the characteristics of the stocks traded, the complexity of the trades, and also on whether the trades are internalized. We also study permanent and temporary price impact of the trades. As expected, seller-initiated trades do not seem to be information related as there is no significant information content. On the contrary, the prices decline after buyer-initiated trades, suggesting that buyers do not possess private information which leads to a permanent shift in prices. Temporary price impacts of all trades are large in magnitude and statistically significant, reflecting compensation for locating counterparties and the cost of negotiating terms. This suggests that the information platform on SSE for locating counterparties is yet to be fully developed to help reduce the transaction cost of block trades.