Sebi, the market regulator, overhauled the block deal framework for stock exchanges by introducing two trading windows with tighter price limits and enhanced disclosure norms, as well as a minimum trade size limit of Rs 25 crore.

Key Highlights

• SEBI hikes minimum block deal order size to ₹25 cr from ₹10 cr.
• New rules mandate block deals be delivery-only, with tighter price bands.

The latest move by the Securities and Exchange Board of India (Sebi) aims to improve transparency and efficiency in the execution of large trades. The revised rules allow exchanges to set trading hours between 8:45 a.m. and 5:00 p.m., as well as provide separate block deal windows during the day.

According to a circular issued by Sebi, two distinct windows for executing large trades have been defined: the morning and afternoon sessions. The morning block deal window will be open from 8:45 to 9:00 a.m., with the previous day's closing price as the reference price.

According to Sebi, the afternoon block deal window will be open from 2:05 pm to 2:20 pm, with a reference price based on the volume weighted average market price (VWAP) of trades executed between 1:45 pm and 2:00pm.

To facilitate trades, the stock exchanges will compute and disseminate necessary information about the VWAP applicable to the execution of block deals in the Afternoon block deal window between 2:00 pm and 2:05 pm, according to the announcement.

Furthermore, Sebi has mandated that orders be placed within a price band of plus or minus 3% of the applicable reference price in each window, subject to surveillance measures and price bands.

The minimum order size for block deals has been raised to Rs 25 crore from Rs 10 crore, and all such transactions must result in delivery, with no squaring off or trade reversals permitted, according to Sebi.

Also Read: Sebi Plans Tighter Disclosure Norms for Billionaire Family Office

According to the circular, stock exchanges must disclose details of block deals to the public after market hours on the same day, including the name of the scrip, the client's name, the quantity of shares bought/sold, and the traded price.

According to Sebi, the new norms will also apply to block deals executed using the optional T+0 settlement cycle. The decision follows recommendations from a working group, discussions by the Secondary Market Advisory Committee (SMAC), and feedback from public consultations.

The regulator has directed market infrastructure institutions, stock exchanges, clearing corporations, and depositories to make necessary system changes, amend bylaws, and notify market participants prior to implementation.

It added that the circular's provisions will take effect on the 60th day after its issuance.