Description

SEBI modifies the block deal framework introducing morning and afternoon trading windows with new timing, pricing mechanisms, and order size requirements of INR 25 crores minimum.

Summary

SEBI has comprehensively revised the Block Deal Framework through Circular SEBI/HO/MRD/POD-III/CIR/P/2025/134 dated October 08, 2025. The new framework introduces two distinct block deal windows - a morning window (8:45 AM to 9:00 AM) and an afternoon window (2:05 PM to 2:20 PM) - each with different reference pricing mechanisms. The minimum order size has been set at INR 25 crores, and all trades must result in delivery without squaring off or reversal. The provisions apply to both T+1 and optional T+0 settlement cycles.

Key Points

  • Two separate block deal trading windows introduced: Morning (8:45 AM - 9:00 AM) and Afternoon (2:05 PM - 2:20 PM)
  • Morning window uses previous day’s closing price as reference price
  • Afternoon window uses VWAP of trades executed between 1:45 PM to 2:00 PM as reference price
  • Stock exchanges calculate and disseminate VWAP between 2:00 PM to 2:05 PM for afternoon window
  • Price range limited to ±3% of applicable reference price, subject to surveillance measures and price bands
  • Minimum order size set at INR 25 crores for all block deal executions
  • All block deals must result in delivery - no squaring off or reversal permitted
  • Stock exchanges must disseminate block deal information (scrip name, client name, quantity, price) on same day after market hours
  • Framework applies to both T+1 and optional T+0 settlement cycles
  • Stock exchanges permitted to set trading hours between 8:45 AM to 5:00 PM

Regulatory Changes

This circular modifies:

  • Paragraph 1.2 of Chapter 1 of SEBI Master Circular on block deal framework
  • Paragraph 3.5 of SEBI Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/172 dated December 10, 2024

Key modifications include:

  1. Introduction of dual window system replacing previous framework
  2. Differentiated pricing mechanisms for each window (previous day closing vs intraday VWAP)
  3. Standardized minimum order size of INR 25 crores across all block deals
  4. Mandatory delivery requirement for all block deal trades
  5. Extended stock exchange trading hour flexibility (8:45 AM to 5:00 PM)

Compliance Requirements

Stock Exchanges:

  • Implement separate trading windows for morning and afternoon block deals
  • Calculate and disseminate VWAP between 2:00 PM to 2:05 PM for afternoon window
  • Disseminate block deal information (scrip name, client name, quantity, traded price) to public on same day after market hours
  • Ensure all trading, settlement, surveillance and risk containment measures applicable to normal trading are implemented for block deal windows
  • Make necessary amendments to byelaws, rules and regulations
  • Put in place necessary systems for implementation

Clearing Corporations:

  • Apply appropriate settlement practices to block deal windows
  • Implement surveillance and risk containment measures

Depositories:

  • Ensure delivery settlement for all block deal trades
  • Apply appropriate settlement practices

Market Participants:

  • Comply with minimum order size of INR 25 crores
  • Execute orders within ±3% of applicable reference price
  • Ensure all block deals result in delivery (no squaring off/reversal)
  • Place orders only during designated block deal windows

Important Dates

  • Circular Issue Date: October 08, 2025
  • Effective Date: 60th day from issuance of circular (December 7, 2025 approximately)
  • Morning Block Deal Window: 8:45 AM to 9:00 AM (daily)
  • VWAP Calculation Period: 1:45 PM to 2:00 PM (for afternoon window reference price)
  • VWAP Dissemination Period: 2:00 PM to 2:05 PM
  • Afternoon Block Deal Window: 2:05 PM to 2:20 PM (daily)

Impact Assessment

Market Structure Impact:

  • High impact on institutional and large traders who rely on block deal mechanisms for executing significant positions
  • Introduction of afternoon window with intraday VWAP pricing provides price discovery based on current day trading, reducing execution risk
  • Morning window retains previous day closing price, maintaining continuity for pre-market large transactions

Operational Impact:

  • Stock exchanges need significant system upgrades to calculate and disseminate VWAP in 5-minute window (2:00-2:05 PM)
  • Market participants must adjust order management systems to accommodate two windows with different pricing mechanisms
  • INR 25 crore minimum threshold may consolidate block deal activity among larger institutional players

Liquidity Impact:

  • Dual window system may fragment block deal liquidity across two time periods
  • Higher minimum threshold (INR 25 crores) may reduce overall block deal volumes but increase average trade size
  • Mandatory delivery requirement eliminates speculative block deal activity

Price Discovery Impact:

  • Afternoon window’s VWAP-based pricing improves price discovery by incorporating intraday market information
  • ±3% price range provides adequate flexibility while limiting price manipulation
  • Same-day disclosure requirements enhance market transparency

Risk Management:

  • Mandatory delivery reduces settlement risk from potential squaring off
  • Application of normal segment surveillance measures to block windows strengthens risk containment
  • Applicable to both T+1 and T+0 cycles ensures consistency across settlement frameworks

Impact Justification

Significant structural change to block deal mechanism affecting all institutional and large traders, introducing dual window system with different pricing mechanisms and INR 25 crore minimum threshold