Review of Block Deal Framework
Summary
This circular modifies the existing Block Deal Framework to include provisions for an optional T+0 settlement cycle alongside the T+1 cycle. It establishes specific morning and afternoon trading windows with defined reference prices and a minimum order size of INR 25 Crores. The regulations mandate dissemination of block deal information post-market hours and require stock exchanges, clearing corporations, and depositories to implement appropriate surveillance measures.
Text
Block deal is execution of large trades through a single transaction without putting either the buyer or seller in a disadvantageous position. The Stock Exchanges may set their trading hours between 08:45 AM to 05:00 PM and for the Block deal mechanism, stock exchanges are permitted to provide a separate trading window(s).
This window shall operate between the trading hours of 08:45 AM to 09:00 AM. The reference price for execution of block deals in this window shall be the previous day closing price of the stock.
This window shall operate between 02:05 PM to 2:20 PM. The reference price for block deals in this window shall 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.
The orders placed shall be within +3% of the applicable reference price in the respective windows as stated above, subject to surveillance measures and applicable price bands.
The minimum order size for execution of trades in the block deal windows shall be INR 25 Crores. Every trade executed in the block deal windows must result in delivery and shall not be squared off or reversed.
The stock exchanges shall 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 the market hours.
The above provisions shall also be applicable for the block deal window under the optional T+0 settlement cycle.
Stock Exchanges, Clearing Corporations and Depositories shall ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures, etc., as applicable to the normal trading segment, shall be applicable and implemented in respect of Block Deal windows also.
The provisions of the circular shall be applicable from the 60th day of issuance of the circular.
take necessary steps and put in place necessary systems for implementation of the above.
make necessary amendments to the relevant byelaws, rules and regulations, wherever required, for the implementation of the above;
bring the provisions of this circular to the notice of the market participants (including investors) and disseminate the same on their website.
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Source: SecMarx — Review of Block Deal Framework. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.