Description

SEBI modifies the Block Deal Framework introducing Morning and Afternoon block deal windows with specific timing, reference prices, and a minimum order size of INR 25 Crores.

Summary

SEBI has issued Circular No. SEBI/HO/MRD/POD-III/CIR/P/2025/134 dated October 08, 2025, modifying the existing Block Deal Framework based on Working Group recommendations and SMAC deliberations. The circular introduces structured block deal windows with specific timing, reference pricing mechanisms, and a minimum order size of INR 25 Crores. These provisions will be applicable from the 60th day of issuance.

Key Points

  • Two distinct block deal windows introduced: Morning (08:45 AM to 09:00 AM) and Afternoon (02:05 PM to 02:20 PM)
  • Morning window uses previous day closing price as reference; Afternoon window uses VWAP from 01:45 PM to 02:00 PM
  • Price range restricted to ±3% of applicable reference price, subject to surveillance measures
  • Minimum order size set at INR 25 Crores
  • All block deals must result in delivery and cannot be squared off or reversed
  • Provisions applicable to both T+1 and optional T+0 settlement cycles
  • Stock exchanges must disseminate block deal information (scrip name, client name, quantity, price) after market hours on the same day

Regulatory Changes

Modified Provisions: Paragraph 1.2 of Chapter 1 of SEBI Master Circular and Paragraph 3.5 of SEBI Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/172 dated December 10, 2024 have been modified.

Block Deal Windows:

  • Morning Block Deal Window: 08:45 AM to 09:00 AM (reference price: previous day closing price)
  • Afternoon Block Deal Window: 02:05 PM to 02:20 PM (reference price: VWAP of trades executed between 01:45 PM to 02:00 PM)
  • Calculation and dissemination period: 02:00 PM to 02:05 PM for VWAP computation

Trading Parameters:

  • Stock exchanges may set trading hours between 08:45 AM to 05:00 PM
  • Orders must be within ±3% of applicable reference price
  • Minimum order size: INR 25 Crores per trade
  • Mandatory delivery requirement (no squaring off or reversals)

Disclosure Requirements: Stock exchanges must disseminate block deal information including scrip name, client name, quantity, and traded price to the public after market hours on the same day.

Compliance Requirements

All Recognized Stock Exchanges, Clearing Corporations, and Depositories must:

  • Implement necessary systems and infrastructure for the new block deal framework
  • Ensure all trading and settlement practices applicable to normal trading segment are implemented for block deal windows
  • Apply appropriate surveillance and risk containment measures
  • Make necessary amendments to relevant byelaws, rules, and regulations
  • Bring provisions to the notice of market participants and investors
  • Ensure dissemination of block deal information after market hours

Market Participants must:

  • Execute block deals only within designated windows with specified reference prices
  • Ensure minimum order size of INR 25 Crores
  • Comply with ±3% price range from reference price
  • Accept mandatory delivery (no squaring off)

Important Dates

  • Circular Issue Date: October 08, 2025
  • Effective Date: 60th day from issuance (approximately December 7, 2025)
  • Morning Block Deal Window: 08:45 AM to 09:00 AM (daily)
  • VWAP Calculation Period: 01:45 PM to 02:00 PM (daily)
  • VWAP Dissemination: 02:00 PM to 02:05 PM (daily)
  • Afternoon Block Deal Window: 02:05 PM to 02:20 PM (daily)

Impact Assessment

Market Impact:

  • Enhanced transparency through structured windows and mandatory post-market disclosure
  • Increased minimum threshold (INR 25 Crores) may limit access to only large institutional investors and high net-worth entities
  • Reduced flexibility with fixed trading windows compared to all-day block deal mechanisms
  • Prevention of price manipulation through reference price mechanisms and ±3% price bands

Operational Impact:

  • Stock exchanges need significant system upgrades to support dual-window mechanism with different reference pricing
  • Real-time VWAP calculation and dissemination systems required between 02:00 PM and 02:05 PM
  • Enhanced surveillance systems needed to monitor compliance with delivery requirements
  • Clearing corporations must ensure settlement mechanisms accommodate both T+0 and T+1 cycles

Investor Impact:

  • Better price discovery through VWAP-based reference pricing in afternoon window
  • Reduced counterparty risk with mandatory delivery requirement
  • Greater transparency through same-day disclosure of block deal details including client names
  • Limited timing flexibility may affect execution strategies for large orders

Compliance Impact:

  • Market Infrastructure Institutions (MIIs) face implementation deadline of approximately 60 days
  • Requirement for bylaw amendments across all exchanges
  • Enhanced disclosure and reporting obligations

Impact Justification

Major revision to block deal framework affecting all stock exchanges, introducing new trading windows with specific timing and price constraints, INR 25 Crore minimum order size, and mandatory delivery requirements.