Description

SEBI modifies block deal framework introducing morning (8:45-9:00 AM) and afternoon (2:05-2:20 PM) trading windows with revised price bands of ±3% and minimum order size of INR 25 crores.

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 modifications introduce two distinct block deal trading windows - a morning window (8:45 AM to 9:00 AM) and an afternoon window (2:05 PM to 2:20 PM) - with different reference pricing mechanisms. The framework maintains the minimum order size of INR 25 crores and introduces a uniform ±3% price band for both windows.

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 price
  • Afternoon window uses VWAP calculated from trades executed between 1:45 PM - 2:00 PM
  • Stock exchanges will calculate and disseminate VWAP between 2:00 PM - 2:05 PM
  • Price range restricted to ±3% of applicable reference price in respective windows
  • Minimum order size remains INR 25 crores
  • All block deal trades must result in delivery and cannot be squared off or reversed
  • Stock exchanges permitted to set trading hours between 8:45 AM to 5:00 PM
  • Framework applies to both T+1 and optional T+0 settlement cycles

Regulatory Changes

Modified Provisions:

  • Paragraph 1.2 of Chapter 1 of SEBI Master Circular No. SEBI/HO/MRD-PoD2/CIR/P/2024/00181 dated December 30, 2024 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 Framework Elements:

  • Introduction of two distinct trading windows instead of previous framework
  • VWAP-based pricing for afternoon window (calculated from 1:45 PM - 2:00 PM trades)
  • Uniform ±3% price band across both windows (subject to surveillance measures and applicable price bands)
  • 15-minute duration for each window
  • 5-minute calculation and dissemination period before afternoon window

Basis for Changes:

  • Recommendations from Working Group
  • Deliberations in Secondary Market Advisory Committee of SEBI (SMAC)
  • Public comments received

Compliance Requirements

For Stock Exchanges:

  • Implement separate trading windows for morning (8:45 AM - 9:00 AM) and afternoon (2:05 PM - 2:20 PM) block deals
  • Calculate VWAP for trades executed between 1:45 PM - 2:00 PM
  • Disseminate VWAP information between 2:00 PM - 2:05 PM for afternoon window
  • Enforce ±3% price range from applicable reference prices
  • Ensure minimum order size of INR 25 crores is maintained
  • Disseminate block deal information including scrip name, client name, quantity, and traded price
  • Apply surveillance measures and applicable price bands
  • May set trading hours between 8:45 AM to 5:00 PM

For Trading Members:

  • Execute block deals only within designated windows
  • Ensure orders are within ±3% of reference price (previous day closing price for morning window, VWAP for afternoon window)
  • Maintain minimum order size of INR 25 crores per trade
  • Ensure all block deals result in delivery (no squaring off or reversals permitted)

For Recognized Clearing Corporations:

  • Align clearing and settlement processes with modified block deal framework

For Depositories:

  • Support delivery obligations arising from block deal executions

Important Dates

  • October 08, 2025: SEBI circular issued (SEBI/HO/MRD/POD-III/CIR/P/2025/134)
  • October 09, 2025: NSE circular issued to members (NSE/CMTR/70712, Circular Ref. No: 139/2025)
  • Implementation Date: Not explicitly specified in the circular (exchanges to notify separately)

Daily Operational Timings:

  • Morning Block Deal Window: 8:45 AM - 9:00 AM
  • VWAP Calculation Period: 1:45 PM - 2:00 PM
  • VWAP Dissemination Period: 2:00 PM - 2:05 PM
  • Afternoon Block Deal Window: 2:05 PM - 2:20 PM

Impact Assessment

Market Impact:

  • Enhanced flexibility for institutional investors with two trading windows
  • Reduced market impact risk through segregated large-value transaction windows
  • More transparent pricing mechanism with VWAP-based afternoon window
  • Potential for improved price discovery with reference to intraday trading activity

Operational Impact:

  • Stock exchanges need to implement dual window infrastructure
  • Real-time VWAP calculation and dissemination systems required
  • Trading members must adjust order routing and execution strategies
  • Surveillance systems need enhancement to monitor compliance across multiple windows

Strategic Considerations:

  • Institutional traders gain strategic timing options (pre-market vs. intraday pricing)
  • Morning window allows positioning based on overnight developments
  • Afternoon window provides execution based on actual market activity
  • Uniform ±3% band ensures controlled price movement in both windows

Risk Mitigation:

  • Mandatory delivery requirement prevents speculative activity
  • Price bands limit excessive volatility
  • Minimum order size ensures framework serves institutional purpose
  • Surveillance measures provide regulatory oversight

Impact Justification

Significant modification to block deal framework affecting institutional trading operations, pricing mechanisms, and trading hours across all securities