Sebi revises block deal norms; minimum order size hiked to ~10 cr

Market regulator Securities and Exchange Board of India (Sebi) on Thursday revised the framework for 'block deals' by providing two separate trading windows of 15 minutes each and increasing the minimum order size to ~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. Besides, the regulator has increased the minimum order size for execution of trades in the block deal window to ~10 crore. Currently, block deals for shares worth ~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 the Secondary Market Advisory Committee (SMAC). 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 the 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 and 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,” Sebi said in the circular.