Sebi Overhauls Block Deal Rules: Min Trade Rs 25 Cr

New Delhi, Oct 8 (PTI) Markets regulator Sebi on Wednesday overhauled the block deal framework for stock exchanges, by setting a minimum trade size limit of Rs 25 crore and introducing two trading windows with tighter price limits and enhanced disclosure norms.

The latest move by the Securities and Exchange Board of India (Sebi) aims to ensure greater transparency and efficiency in the execution of large trades.

Under the revised rules, exchanges have been permitted to set trading hours between 8:45 am and 5:00 pm and provide separate block deal windows during the day.

Two distinct windows -- a morning and an afternoon session -- have been defined for executing large trades, according to a circular issued by Sebi.

The morning block deal window will operate between 8:45 am to 9:00 am, with the reference price being the previous day's closing price.

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

The stock exchanges will compute and disseminate necessary information regarding the VWAP applicable for the execution of block deals in the Afternoon block deal window between 2:00 pm and 2:05 pm to facilitate trades, it said.

Further, Sebi has stipulated that orders must be placed within a price band of plus or minus 3 per cent of the applicable reference price in each window, subject to surveillance measures and price bands.

The minimum order size for block deals has been set at Rs 25 crore against the current Rs 10 crore, and all such transactions must result in delivery, with squaring off or reversal of trades not permitted, Sebi said.

The stock exchanges have also been directed to disclose details of block deals, including name of the scrip, client's name, quantity of shares bought/sold and traded price to the public after the market hours on the same day, as per the circular.

The new norms will also extend to block deals executed under the optional T+0 settlement cycle, Sebi said.

The move follows recommendations from a working group and deliberations by the Secondary Market Advisory Committee (SMAC), as well as inputs from public consultations.

The market infrastructure institutions, stock exchanges, clearing corporations and depositories, have been asked to make necessary system changes, amend byelaws and inform market participants ahead of implementation, the regulator said.

The provisions of the circular will be applicable from the 60th day of issuance of the circular, it added.