Outlook Business Desk
The Securities and Exchange Board of India (Sebi) has issued a circular on Wednesday, revising the block deal framework for stock exchanges to make large trade execution more transparent, efficient and less prone to price manipulation.
The price range for block deals has been revised to ±3% of the reference price, with a minimum order size of ₹25 crore. Earlier, it was ±1% and ₹10 crore, last revised in October 2017. Orders below ₹25 crore will continue in the normal market to maintain liquidity.
Block deals are primarily used by institutional investors, including mutual funds and insurance companies, to execute large trades through a single pre-negotiated transaction. Trades must occur on stock exchanges within the two designated windows: 8:45–9:00 AM and 2:05–2:20 PM.
Block deals will operate in a morning session from 8:45 AM to 9:00 AM. During this window, the reference price for executing trades will be the previous day’s closing price of the stock, ensuring clarity and transparency for institutional investors.
The afternoon block deal session runs from 2:05 PM to 2:20 PM, using the volume-weighted average price (VWAP) of trades between 1:45 PM and 2:00 PM as the reference. Stock exchanges will publish the calculated VWAP from 2:00 PM to 2:05 PM.
Between 2:00 PM and 2:05 PM, stock exchanges will calculate and share the volume-weighted average price applicable for the afternoon block deal window. This ensures traders have the reference price needed for executing block deals accurately.
The Sebi circular will come into effect from December 7, 2025. All the revised provisions, including order size, price bands, and trading windows, will also apply to block deals executed under the optional T+0 settlement cycle.
Block deal regulations were reviewed as markets grew and the size of block deals increased. The framework, first introduced in 2005, has been periodically reviewed to keep pace with market growth and evolving trading practices.
Sebi also analysed FY25 block deal data at National Stock Exchange (NSE) and concluded that 90% of deals were above ₹14 crore, 75% above ₹26 crore, 60% above ₹50 crore, and 50% above ₹84 crore. This highlighted the need to revise the minimum order size.
SEBI’s relaxation of block deal price bands from 1% to 3% may benefit retail and long-term institutional investors, while the higher minimum deal size favours institutional participation, potentially reducing the involvement of high-net-worth individuals and family offices in block deals.