Exchange Distribution is a distribution of a large block of stock on the floor of the exchange that is crossed with offsetting orders.
Applying "Exchange Distribution" to Securities Exams:
An exchange distribution often takes place when a significant shareholder wants to sell their position in a security. The exchange distribution will be handled by a member firm. During the course of the distribution the firm may call its large clients to measure their interest in purchasing a portion of the block of stock. The floor broker with the cross the stock with the approval of the designated market maker (specialist)