Sebi proposes changes to block deal framework

India's markets regulator on Friday proposed changes to the country's block deal framework, including raising the minimum order size for such trades.

The Securities and Exchange Board of India proposed to increase the minimum block deal size to 250 million rupees from the current 100 million rupees, according to a consultation paper published on its website.

A block deal is used to execute large trades through a single transaction without putting either the buyer or seller in a disadvantageous position. For such trades, stock exchanges are permitted to provide a separate trading window.

SEBI also suggested changes to the price band of block trades for non-derivatives stocks, widening it to 3% on either side of the stock's reference price from the current 1%. It proposed to retain the 1% price band for futures and options stocks.

The regulator proposed to keep two windows for such deals - the morning session 8:45 a.m. IST to 9:00 a.m. IST, and the afternoon session 2:05 p.m. IST to 2:20 p.m. IST.

SEBI said for the morning window, the reference price for execution of block deals would be the previous day closing price of the stock. For the afternoon session, the reference price would be the volume weighted average market price of the trades executed in the stock in the cash segment between 01:30 p.m. and 2:00 p.m. IST.

The regulator's draft circular was based on the feedback received from various stakeholders, stock exchanges and clearing corporations.