The Securities & Exchange Board of India (SEBI) has decided to increase the block deal size and a wider price band for stocks traded in these deals, through a circular issued Wednesday.
Under the new framework effective December 7, the minimum order size for execution of trades in the block deal windows shall be Rs 25 crore as against Rs 10 crore earlier and the price band of within 3% of the applicable reference price in the respective windows, higher than the current 1%.
New circular expands price band
In its August consultation paper, the regulator only proposed to revise price band for non-F&O stocks. The circular said that the morning block deal window will be from 08:45 AM to 09:00 AM and afternoon between 02:05 PM to 2:20 PM. “Between the period 02:00 pm to 02:05 pm, the stock exchanges shall calculate and disseminate necessary information regarding the VWAP applicable for the execution of block deals in the Afternoon block deal window,” it said.
Experts sees move boosting market liquidity
Experts believe that this is a timely move given that volumes and liquidity in the market has increased. They said that smaller deals of less than Rs 10 crore will come into the cash market to improve depth and liquidity. The industry also expects that going forward, SEBI also has plans to come with a separate framework for small and medium enterprises.
A block deal is execution of large trades through a single transaction without putting either the buyer or seller in a disadvantageous position.