Sebi raises minimum block deal size to Rs 25 crore, mandates delivery-only trades. Check key takeaways

The Securities and Exchange Board of India (Sebi) on Wednesday increased the minimum order size for trades in the block deal window to Rs 25 crore, up from the current Rs 10 crore. The regulator also mandated that all block deal trades must result in delivery, prohibiting them from being squared off or reversed.

Regarding the price range, orders placed must be within +3% of the applicable reference price in the respective windows, subject to surveillance measures and applicable price bands.

In a circular issued today, Sebi announced these modifications, which will come into effect on the 60th day from today.

A block deal is the execution of large trade through a single transaction without disadvantage to the buyer or seller. The stock exchanges can set their trading hours between 08:45 am and 05:00 pm for the block deal mechanism. Block deals happen through a separate trading window.

Other conditions for the block deal:

1) Morning block deal window: This window will operate between the trading hours of 08:45 am to 09:00 am. The reference price for execution of block deals in this window will be the previous day closing price of the stock.

2) Afternoon block deal window: This window will operate between 2:05 pm to 2:20 pm. The reference price for block deals in this window will be the volume weighted average market price (VWAP) of the trades executed in the stock in the cash segment between 01:45 PM to 02:00 PM.

Between the period 2:00 pm to 02:05 pm, the stock exchanges will calculate and disseminate necessary information regarding the VWAP applicable for the execution of block deals in the afternoon block deal window, the circular said.

3) The stock exchanges will disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought/sold, traded price, etc. to the general public on the same day, after market hours.

4) The above provisions shall also be applicable for the block deal window under the optional T+0 settlement cycle.

5) Stock exchanges, Clearing Corporations and depositories are also required to ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures be applicable and implemented in respect of block deal windows also.

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