The Securities and Exchange Board of India (Sebi) has issued circular for implementation revised block deal framework for stock exchanges, aiming to make the execution of large trades more transparent and efficient. The block deal mechanism allows pre-negotiated deals between parties to be executed on the exchange within designated windows and under strict rules to prevent price manipulation.
The price range will be ±3 percent of the reference price and the minimum order size of Rs 25 crore. As per existing norms the price range is ±1 percent and the minimum order size is Rs 10 crore. Sebi had last tweaked the order size in October 2017. The higher threshold is expected to bring liquidity, as the orders below Rs 25 crore will take place in the normal market.
Block deals operate in two specific windows: a morning session from 8:45 AM to 9:00 AM and an afternoon session from 2:05 PM to 2:20 PM. Sebi circular says, in the morning window, the reference price for executing block deals will be the previous day’s closing price of the stock. For the afternoon window, the reference price will be based on the volume-weighted average price (VWAP) of trades executed in the stock on the cash segment between 1:45 PM and 2:00 PM. Stock exchanges will calculate and disseminate the applicable VWAP between 2:00 PM and 2:05 PM, ahead of the afternoon session. Sebi circular will be effective from December 7, 2025.
Sebi circular said that the above provisions shall also be applicable for the block deal window under the optional T+0 settlement cycle.
Block deal regulations were reviewed as markets have grown, and the size of block deals has gone up. The framework was first introduced in 2005 and has been reviewed periodically. A working group formed on the issue had suggested a price range of ±5 percent for the morning block deal window and a ±3 percent price range for the afternoon trading window, though one of the exchanges had suggested a ±2 percent price range. The working group had recommended that the limit should be hiked, and the rationale was that benchmark indices have increased nearly three times over the last 10 years. With the growth in the size and depth of markets, it was desirable that limits be increased.
Sebi has also analysed the data of block deals of FY25 at NSE and concluded that 90 percent of block deals were of the size above Rs 14 crore, 75 percent above Rs 26 crore, 60 percent above Rs 50 crore, and 50 percent above Rs 84 crore. So, there was a need to review the order size.
Moneycontrol had previously reported on May 27 that block deals could get a makeover, and on August 11 that the Sebi working group had proposed a broader price range and higher order size. Later, Sebi floated a draft circular for public comments and sought views of stakeholders.
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