Description
SEBI modifies the block deal framework with new trading windows, reference prices, and a minimum order size of INR 25 Crores, applicable from 60 days of circular issuance.
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 circular modifies existing provisions to establish two distinct trading windows with specific reference prices, introduces a uniform minimum order size of INR 25 Crores, and mandates a ±3% price range from reference prices. These changes apply to both T+1 and T+0 settlement cycles and will be effective 60 days from the circular date.
Key Points
- Two block deal windows established: Morning Window (08:45 AM - 09:00 AM) and Afternoon Window (02:05 PM - 02:20 PM)
- Morning Window uses previous day closing price as reference; Afternoon Window uses VWAP from 01:45 PM to 02:00 PM
- Minimum order size increased to INR 25 Crores for all block deal executions
- Price range restricted to ±3% of applicable reference price in respective windows
- Stock exchanges can set trading hours between 08:45 AM to 05:00 PM
- VWAP calculation and dissemination period: 02:00 PM to 02:05 PM
- All block deals must result in delivery and cannot be squared off or reversed
- Same-day public disclosure required after market hours including scrip name, client name, quantity, and traded price
- Provisions applicable to both T+1 and optional T+0 settlement cycles
- All surveillance, risk containment, and trading practices of normal segment apply to block deal windows
Regulatory Changes
Modified Framework Elements:
Trading Windows: Replaced previous framework with two specific windows:
- Morning Block Deal Window: 08:45 AM - 09:00 AM (reference: previous day closing price)
- Afternoon Block Deal Window: 02:05 PM - 02:20 PM (reference: VWAP from 01:45 PM - 02:00 PM)
Reference Price Methodology:
- Morning window: Static reference (previous close)
- Afternoon window: Dynamic reference based on intraday VWAP calculation
- Preparation period (02:00 PM - 02:05 PM) for VWAP calculation and dissemination
Order Parameters:
- Minimum order size: INR 25 Crores (uniform threshold)
- Price band: ±3% from applicable reference price
- Subject to surveillance measures and applicable price bands
Settlement Requirements:
- Mandatory delivery-based settlement
- No square-off or reversal permitted
- Framework extends to optional T+0 settlement cycle
Disclosure Norms:
- Enhanced transparency with same-day disclosure after market hours
- Information to include: scrip name, client name, quantity, traded price
Compliance Requirements
For Stock Exchanges:
- Implement separate trading window(s) for block deals within 08:45 AM - 05:00 PM trading hours
- Calculate and disseminate VWAP between 02:00 PM to 02:05 PM for afternoon window reference
- Ensure same-day public dissemination of block deal information after market hours
- Apply all surveillance and risk containment measures applicable to normal trading segment
- Make necessary amendments to byelaws, rules, and regulations
- Notify market participants and investors of the changes
For Clearing Corporations:
- Implement appropriate settlement practices for block deal windows
- Ensure delivery-based settlement without square-off provisions
- Apply risk containment measures equivalent to normal segment
For Depositories:
- Ensure settlement infrastructure supports delivery-based block deal settlements
- Implement necessary systems for T+0 and T+1 settlement cycles
For Market Participants:
- Adhere to minimum order size of INR 25 Crores
- Execute orders within ±3% price range of reference price
- Ensure delivery-based settlement (no intraday square-off)
- Comply with applicable surveillance measures and price bands
Important Dates
- Circular Issue Date: October 08, 2025
- Effective Date: 60th day from circular issuance (approximately December 7, 2025)
- Daily Operational Timings:
- Morning Block Deal Window: 08:45 AM - 09:00 AM
- VWAP Calculation Period: 01:45 PM - 02:00 PM
- VWAP Dissemination Period: 02:00 PM - 02:05 PM
- Afternoon Block Deal Window: 02:05 PM - 02:20 PM
- Block Deal Disclosure: After market hours (same day)
Impact Assessment
Market Impact:
Institutional Trading: The INR 25 Crores minimum significantly increases the threshold, limiting block deal facility to larger institutional transactions and reducing its accessibility for mid-sized institutional trades.
Price Discovery: Two-window structure with different reference prices creates distinct pricing mechanisms - morning window offers certainty based on previous close, while afternoon window reflects intraday price movements through VWAP.
Market Liquidity: Afternoon window’s VWAP-based pricing may reduce information asymmetry and improve price efficiency for large trades, potentially encouraging more institutional participation.
Trading Strategy: The ±3% price band provides negotiation flexibility while containing price volatility, balancing execution certainty with market impact mitigation.
Operational Impact:
Infrastructure Requirements: Stock exchanges, clearing corporations, and depositories must upgrade systems to support dual windows with different reference price calculations and real-time VWAP computation.
Surveillance Enhancement: Extended trading hours (08:45 AM start) and multiple windows require enhanced surveillance infrastructure and real-time monitoring capabilities.
Disclosure Compliance: Same-day disclosure requirements necessitate automated reporting systems for transparency obligations.
Regulatory Impact:
T+0 Alignment: Framework’s applicability to optional T+0 settlement cycle demonstrates SEBI’s commitment to faster settlement cycles while maintaining market integrity for large trades.
Delivery Mandate: Prohibition on square-off ensures genuine investment intent and reduces speculative use of block deal mechanism.
Transparency: Enhanced disclosure requirements (including client names) increase market transparency and regulatory oversight of large trades.
Impact Justification
Major structural change to block deal mechanism affecting all large institutional trades, with new timing windows, reference pricing methodology, and increased minimum threshold to INR 25 Crores