Description

SEBI modifies the Block Deal Framework introducing morning and afternoon trading windows with new timing, pricing, and order size requirements effective 60 days from issuance.

Summary

SEBI has issued Circular No. SEBI/HO/MRD/POD-III/CIR/P/2025/134 dated October 08, 2025, comprehensively reviewing and modifying the Block Deal Framework. The revised framework introduces two distinct trading windows - a morning window (8:45 AM to 9:00 AM) and an afternoon window (2:05 PM to 2:20 PM) - with specific reference pricing mechanisms for each. The minimum order size has been set at INR 25 crores, and all trades must result in delivery without squaring off or reversal.

Key Points

  • Two separate block deal windows established: 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; Afternoon window uses VWAP calculated from 1:45 PM to 2:00 PM
  • Price range restricted to ±3% of applicable reference price in respective windows
  • Minimum order size of INR 25 crores mandatory for all block deals
  • All trades must result in delivery and cannot be squared off or reversed
  • Stock exchanges can set trading hours between 8:45 AM to 5:00 PM
  • Information on block deals (scrip name, client name, quantity, price) must be disseminated after market hours on the same day
  • Provisions apply to both T+1 and optional T+0 settlement cycles

Regulatory Changes

Modified Provisions:

  • Paragraph 1.2 of Chapter 1 of SEBI Master Circular on Block Deal Framework has been modified
  • Paragraph 3.5 of SEBI Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/172 dated December 10, 2024 has been modified

New Block Deal Windows:

  1. Morning Block Deal Window (8:45 AM - 9:00 AM): Reference price is previous day’s closing price
  2. Afternoon Block Deal Window (2:05 PM - 2:20 PM): Reference price is VWAP of trades executed between 1:45 PM to 2:00 PM

VWAP Calculation Period: Between 2:00 PM to 2:05 PM, stock exchanges must calculate and disseminate VWAP information for the afternoon block deal window

Order Specifications:

  • Orders must be within ±3% of applicable reference price
  • Subject to surveillance measures and applicable price bands
  • Minimum order size: INR 25 crores
  • Mandatory delivery-based trades (no squaring off or reversal permitted)

Compliance Requirements

Stock Exchanges must:

  • Implement separate trading windows for 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 after market hours on same day
  • Make necessary amendments to byelaws, rules, and regulations
  • Implement all appropriate trading and settlement practices
  • Apply surveillance and risk containment measures applicable to normal trading segment

Clearing Corporations must:

  • Ensure settlement practices for block deals align with normal segment requirements
  • Implement risk containment measures

Depositories must:

  • Ensure appropriate settlement practices for block deal windows

All Market Infrastructure Institutions (MIIs) must:

  • Put in place necessary systems for implementation
  • Amend relevant byelaws, rules, and regulations
  • Notify market participants and investors of the provisions

Important Dates

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

Impact Assessment

Market Impact:

  • High impact on institutional investors and large traders who utilize block deal mechanisms
  • Introduction of afternoon window with VWAP pricing provides intraday price discovery option
  • INR 25 crore minimum order size restricts block deals to large institutional participants
  • Two windows per day increase flexibility for executing large trades

Operational Impact:

  • Stock exchanges need significant system upgrades to implement dual windows with different pricing mechanisms
  • Real-time VWAP calculation and dissemination required between 2:00 PM to 2:05 PM
  • Enhanced surveillance requirements to monitor compliance with ±3% price bands
  • Mandatory disclosure requirements increase transparency but may affect trading strategies

Settlement Impact:

  • Delivery-only trades eliminate speculative block deals
  • Provisions extend to both T+1 and T+0 settlement cycles
  • No reversal or squaring off increases settlement certainty

Investor Impact:

  • Increased transparency through same-day disclosure of block deal details
  • Better price discovery through VWAP-based afternoon window
  • Protection from disadvantageous pricing through ±3% bands
  • Limited to large institutional investors due to INR 25 crore threshold

Impact Justification

Major restructuring of block deal framework affecting all stock exchanges, clearing corporations, and depositories with new timing windows, pricing mechanisms, and minimum order size of INR 25 crores