SEBI Revises Block Deal Rule: Minimum Order Size Increased to Rs 25 Cr, New Timings, Compulsory Delivery & All

The Securities and Exchange Board of India (SEBI) has introduced a revamped block deal framework aimed at improving transparency, enhancing market integrity and aligning trade execution with broader investor protection norms. The new guidelines come amid SEBI's ongoing efforts to strengthen surveillance mechanisms and mitigate the potential for market abuse in large-volume trades.

SEBI Announces New Block Deal Guidelines: Minimum Order Size Increased to Rs 25 Crore

One of the most notable changes in the revised framework is the increase in the minimum order size for block deals. Under the updated norms, only trades with a minimum order value of Rs 25 crore will qualify as block deals-up from the existing threshold of Rs 10 crore. This move is expected to ensure that only serious institutional participants engage in such transactions, thereby reducing speculative activities in the block deal window.

"Raising the block deal threshold to Rs 25 crore should filter out the noise, reserving the special window for only the largest, high-conviction trades. This will push more liquidity into the main market, improving price discovery, while making the block windows themselves purer signals of major market moves," Mr. Tarun Singh, Founder & MD, Highbrow Securities.

No Squaring Off or Reversals Allowed in Block Deals

To reinforce the integrity of these transactions, SEBI has mandated that all trades executed in the block deal window must result in compulsory delivery. In other words, participants will no longer be allowed to square off or reverse trades. This requirement aims to curb manipulation and make block deal activity more accountable.

Real-Time Public Disclosures After Market Hours

In a step toward boosting market transparency, SEBI has directed stock exchanges to disclose key details of all block deals to the public on the same day, after market hours. The disclosures must include information such as the name of the security (scrip), client identity, quantity traded and transaction price.

These rules will also apply to block deals settled under the optional T+0 settlement cycle, ensuring uniform transparency across different timelines.

SEBI Imposes 3% Price Band Limit on Block Deal Trades

Block deal orders will now be restricted to a 3% price band-either above or below the prevailing market price. This move is intended to prevent significant price distortions and limit the possibility of sharp movements based on large trades, which could influence retail investor sentiment or intraday pricing trends.

Block Deal Windows and Timing Changes: Check New Upates

SEBI has maintained the current two-window structure for block deals but introduced stricter timing and reference pricing mechanisms:

Morning Window: Block deals can be executed between 8:45 am and 9:00 am, with the previous day's closing price serving as the reference for determining the permissible price range.

Afternoon Window: Trades in the afternoon block deal window will be allowed from 2:05 pm to 2:20 pm. The reference price for this window will be the volume-weighted average price (VWAP) of the stock in the cash segment between 1:45 pm and 2:00 pm.

Stock exchanges will be responsible for calculating and publishing the VWAP between 2:00 pm and 2:05 pm, just before the afternoon window opens. This ensures that all participants have access to a consistent benchmark for pricing.

When Will SEBI's Revised Block Deal Framework Come Into Effect?

The revised block deal framework will come into effect 60 days from the date of issuance of the SEBI circular. SEBI has also instructed stock exchanges, clearing corporations and depositories to ensure that all relevant trading, settlement, risk management and surveillance processes applicable to the normal trading segment are also enforced for block deals.

This includes risk containment measures, real-time monitoring and matching settlement procedures, ensuring that block deals are not treated as an exception but as an integral part of the regulated market structure.

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