India’s markets regulator SEBI on Friday proposed changes to the country’s block deal framework, including raising the minimum order size for such trades.
The Securities and Exchange Board of India proposed to increase the minimum block deal size to Rs 25 crore from the current Rs 10 crore, according to a consultation paper published on its website.
A block deal is used to execute large trades through a single transaction without putting either the buyer or seller in a disadvantageous position. For such trades, stock exchanges are permitted to provide a separate trading window.
Changes in price band
SEBI also suggested changes to the price band of block trades for non-derivatives stocks, widening it to 3% on either side of the stock’s reference price from the current 1%. It proposed to retain the 1% price band for futures and options stocks.
The regulator proposed to keep two windows for such deals — the morning session 8:45 a.m. IST to 9:00 a.m. IST, and the afternoon session 2:05 p.m. IST to 2:20 p.m. IST.
SEBI said for the morning window, the reference price for execution of block deals would be the previous day closing price of the stock. For the afternoon session, the reference price would be the volume weighted average market price of the trades executed in the stock in the cash segment between 01:30 p.m. and 2:00 p.m. IST.
The regulator’s draft circular was based on the feedback received from various stakeholders, stock exchanges and clearing corporations.
Additional incentives for first-time women investors
SEBI also plans to propose additional financial incentives for distributors and fund houses to enroll first-time women investors, its chairperson said on Friday, in its latest bid to increase penetration of mutual fund products.
Women investors’ assets under management (AUM) accounts for about 33% of individual investors’ AUM as of March 2024, according to data from Association of Mutual Funds in India (AMFI).
“We are proposing to give additional incentives to distributors of mutual funds for first-time women investors,” Securities and Exchange Board of India chairperson Tuhin Kanta Pandey said at an AMFI event, without providing further details.
SEBI has been trying to boost mutual fund penetration in the country by promoting financial awareness and improving financial inclusion.