SEBI Revises Block Deal Norms, Hikes Minimum Order Size To Rs 10 Crore
- SEBI provides two separate trading windows of 15 minutes each for block deals and increases minimum order size to Rs 10 crore.
- The morning window would operate from 8:45 am to 9:00 am.
- The afternoon window would operate from 2:05 pm to 2:20 pm.
- Every trade executed in the block deal windows must result in delivery and would not be squared off or reversed, SEBI says.
Market regulator SEBI today revised the framework for block deals by providing two separate trading windows of 15 minutes each and increasing the minimum order size to Rs 10 crore. The move is aimed at ensuring confidentiality of the large trades and stable prices for such transactions.
The block deal window is provided for buyers and sellers to execute trades for a large number of shares. Such deals are usually negotiated before their execution.
Under the new rules, SEBI would provide two block deal windows – morning and afternoon – of 15 minutes duration each.
The regulator has also increased the minimum order size for execution of trades in the block deal window to Rs 10 crore. Presently, block deal for shares worth Rs 5 crore through a single transaction is allowed.
The decision has been taken as SEBI received suggestions from market participants to review the block deal framework. The final norms have been put in place after taking into consideration views of market participants and Secondary Market Advisory Committee.
The morning window would operate from 8:45 am to 9:00 am and the reference price for execution of block deals in this window would be the previous day's closing price of the stock.
With regard to afternoon window, the regulator said it would operate from 2:05 pm to 2:20 pm. The pricing would be based on the volume weighted average market price (VWAP) of the trades executed in the stock in the cash segment between 1:45 pm to 2:00 pm.
“Between the period 2:00 pm and 2:05 pm, stock exchanges shall calculate and disseminate necessary information regarding the VWAP applicable for the execution of block deals in the Afternoon block deal window,” the SEBI circular said.
The transaction price of a share should be within plus or minus 1 percent of the previous day’s closing.
As per the current framework, block deals are allowed during a 35-minute window – between 9.15 am and 9.50 am.
According to SEBI, every trade executed in the block deal windows must result in delivery and would not be squared off or reversed.
The stock exchanges would disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought or sold, traded price, among others, to the general public on the same day, after the market hours.
SEBI asked exchanges to ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures, as applicable to the normal trading segment, are made applicable and implemented in respect of the block deal windows as well.