Description

SEBI revises the block deal framework introducing morning and afternoon trading windows with specific reference prices, maintaining 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 new framework introduces two distinct block deal windows - a morning window (08:45 AM to 09:00 AM) using previous day closing price as reference, and an afternoon window (02:05 PM to 02:20 PM) using VWAP calculated from 01:45 PM to 02:00 PM trades. The minimum order size remains INR 25 crores with a price range of ±3% from applicable reference price. These provisions apply to both T+1 and optional T+0 settlement cycles.

Key Points

  • Two separate block deal trading windows introduced with specific timings and reference prices
  • Morning Block Deal Window: 08:45 AM to 09:00 AM (reference: previous day closing price)
  • Afternoon Block Deal Window: 02:05 PM to 02:20 PM (reference: VWAP from 01:45 PM to 02:00 PM)
  • Stock exchanges can set trading hours between 08:45 AM to 05:00 PM
  • Price range: ±3% of applicable reference price in respective windows
  • Minimum order size: INR 25 crores per trade
  • All trades must result in delivery and cannot be squared off or reversed
  • VWAP calculation and dissemination period: 02:00 PM to 02:05 PM
  • Block deal information disclosure required same day after market hours
  • Provisions applicable to both T+1 and optional T+0 settlement cycles

Regulatory Changes

  • Modified Paragraph 1.2 of Chapter 1 of SEBI Master Circular No. SEBI/HO/MRD-PoD2/CIR/P/2024/00181 dated December 30, 2024
  • Modified Paragraph 3.5 of SEBI Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/172 dated December 10, 2024
  • Replaces single block deal window with dual-window structure
  • Introduces specific reference pricing mechanisms for each window (previous day closing vs. intraday VWAP)
  • Establishes 15-minute duration for each block deal window
  • Mandates 5-minute gap for VWAP calculation and dissemination between regular trading and afternoon block window
  • Changes based on Working Group recommendations, Secondary Market Advisory Committee (SMAC) deliberations, and public comments

Compliance Requirements

For Stock Exchanges:

  • Implement separate trading windows for block deals within permitted trading hours (08:45 AM to 05:00 PM)
  • Calculate and disseminate VWAP between 02:00 PM to 02:05 PM for afternoon window reference pricing
  • Disseminate block deal information (scrip name, client name, quantity, traded price) to public same day after market hours
  • Ensure all trading and settlement practices applicable to normal trading segment are implemented for block deal windows
  • Apply appropriate surveillance and risk containment measures

For Clearing Corporations:

  • Implement settlement practices for block deal windows equivalent to normal trading segment
  • Apply risk containment measures specific to block deals

For Depositories:

  • Ensure settlement infrastructure supports block deal framework requirements
  • Implement appropriate surveillance measures

For Market Participants:

  • Execute block deals only within specified windows and price ranges
  • Ensure minimum order size of INR 25 crores
  • Ensure all block trades result in delivery (no squaring off or reversal)
  • Comply with disclosure requirements

For All Market Infrastructure Institutions (MIIs):

  • Take necessary steps and put in place required systems for implementation

Important Dates

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

Impact Assessment

Market Impact:

  • Provides institutional investors and large traders with two distinct trading opportunities during the day
  • Morning window enables pre-market block execution at previous day’s closing price, beneficial for overnight liquidity needs
  • Afternoon window offers intraday price discovery through VWAP-based execution, reducing information asymmetry
  • Dual-window structure may increase block trading activity by accommodating different trading strategies
  • Enhanced transparency through same-day disclosure requirements

Operational Impact:

  • Stock exchanges must upgrade systems to support dual-window operations with different reference pricing mechanisms
  • Real-time VWAP calculation and dissemination infrastructure required
  • Surveillance systems need enhancement to monitor two separate windows with different pricing dynamics
  • Clearing and settlement infrastructure must handle block deals across multiple windows and settlement cycles (T+0 and T+1)

Price Discovery Impact:

  • Morning window provides stability using previous day closing price as anchor
  • Afternoon window improves intraday price discovery by using recent VWAP
  • ±3% price band limits potential market impact while allowing reasonable flexibility

Liquidity Impact:

  • May improve overall market liquidity by providing dedicated large-trade execution mechanism
  • Mandatory delivery requirement ensures genuine trading interest and reduces speculative activity
  • INR 25 crore minimum maintains focus on institutional-sized transactions

Systemic Impact:

  • Applies uniformly across all recognized stock exchanges and clearing corporations
  • Extension to T+0 settlement cycle ensures framework consistency across different settlement mechanisms
  • Based on regulatory working group and market advisory committee recommendations, indicating broad stakeholder consultation

Impact Justification

Significant changes to block deal framework affecting all stock exchanges, clearing corporations, and large institutional traders. Introduces new trading windows with specific timing and pricing mechanisms.