Markets regulator Sebi has proposed raising the minimum order size for execution of trades in the block deal windows to Rs 25 crore from the current Rs 10 crore.
The existing threshold had been in place since 2017.
A block deal is a large trade of share that takes place between a buyer and a seller through a single transaction on the stock exchange. It can only be executed during a special 15-minute window provided by stock exchanges twice a day.
In its consultation paper, Sebi proposed that "the minimum order size for execution of trades in the block deal windows shall be Rs 25 crore. Every trade executed in the block deal windows must result in delivery and shall not be squared off or reversed." Alongside the higher threshold, Sebi has proposed to review the pricing mechanism for such trades. It is contemplating widening the price band to up to 3 per cent for non-derivative stocks, while retaining the existing 1 per cent band for futures and options (F&O) scrips.
This move is expected to reduce the risk of market manipulation.
Currently, trades can only be executed within a 1 per cent band on either side of the previous day's closing price.
The consultation paper further details the operating hours of the block deal windows. The morning session will run between 8:45 am and 9 am, with trades executed at the previous day's closing price. The afternoon session, from 2:05 pm to 2:20 pm, will use the volume weighted average market price (VWAP) of trades executed in the cash segment between 1:30 pm and 2 pm as the reference price.
These windows are designed to provide buyers and sellers a platform to execute large share transactions that are usually negotiated in advance.
To enhance transparency, Sebi said stock exchanges would disseminate details such as the name of the scrip, client name, quantity of shares, and the traded price to the public on the same day after market hours.
The Securities and Exchange Board of India (Sebi) has sought public comments till September 15 on the proposals.
