SEBI suggests revisions to block deal framework
What's the story
The Securities and Exchange Board of India (SEBI), the country's markets regulator, has proposed significant changes to the block deal framework. The proposal includes raising the minimum order size for such trades from ₹10 crore to ₹25 crore. Block deals are large trades executed through a single transaction, without putting either party at a disadvantage.
Proposal details
Price band revision for non-derivatives stocks
The proposed changes also include a revision in the price band for block trades of non-derivative stocks. The price band would be widened to 3% on either side of the stock's reference price, from the current 1%. However, for futures and options stocks, SEBI has proposed to keep the price band at 1%.
Trading sessions
Proposed trading windows for block deals
SEBI has also proposed to keep two trading windows for block deals. The morning session will be from 8:45am to 9:00am, while the afternoon session will run from 2:05pm to 2:20pm. For the morning window, the reference price for executing block deals would be yesterday's closing price of the stock.
Market influence
Afternoon session reference price
In the afternoon session, the reference price would be the volume-weighted average market price of trades executed in the stock during cash segment trading between 1:30pm and 2:00pm. This proposal is part of SEBI's draft circular based on feedback from various stakeholders, including stock exchanges and clearing corporations. The regulator also said information on block deals, such as scrip name, client name, quantity bought/sold, traded price, etc., will be made public after market hours.