New Delhi: 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 are 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 and 9:00 am, with the reference price being the previous day’s closing price.
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. Stock exchanges will compute and disseminate necessary information regarding the VWAP applicable for the execution of block deals in the afternoon window between 2:00 pm and 2:05 pm to facilitate trades.
Further, Sebi has stipulated that orders must be placed within a price band of plus or minus 3 percent of the applicable reference price in each window, subject to surveillance measures and price bands.
The minimum order size for block deals has been increased to Rs 25 crore from the current Rs 10 crore. Additionally, all such transactions must result in delivery, with squaring off or reversal of trades not permitted, Sebi stated.
Stock exchanges have also been directed to disclose details of block deals—including the name of the scrip, client’s name, quantity of shares bought or sold, and traded price—to the public after market hours on the same day.
These new norms will also extend to block deals executed under the optional T+0 settlement cycle.
The regulatory changes follow recommendations from a working group and deliberations by the Secondary Market Advisory Committee (SMAC), as well as inputs from public consultations.
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 provisions of the circular will be applicable from the 60th day of its issuance.
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https://www.freepressjournal.in/business/sebi-overhauls-block-deal-framework-for-stock-exchanges-sets-minimum-trade-size-limit-of-25-crore
