SEBI Tightens Block Deal Rules to Boost Transparency and Market Integrity

he Securities and Exchange Board of India (SEBI) has introduced significant changes to the block deal framework, aiming to enhance transparency, accountability, and market integrity in large share transactions. One of the key changes is the increase in minimum order size for block deals from ₹10 crore to ₹25 crore, ensuring that the block window is reserved for truly large transactions. Additionally, all block deal trades must now result in mandatory delivery of shares, prohibiting squaring off or reversing transactions, which strengthens the authenticity of ownership transfers.

SEBI has also mandated same-day disclosure requirements, compelling stock exchanges to publish details of block deals after market hours, including the name of the scrip, client identity, traded quantity, and price. These norms will also apply to block deals executed under the optional T+0 settlement cycle, creating uniformity across settlement types. To manage volatility, the regulator has set a ±3% price band for block deal orders around the prevailing market price and designated two trading windows: a morning session from 8:45 a.m. to 9:00 a.m., using the previous day’s closing price as a reference, and an afternoon session from 2:05 p.m. to 2:20 p.m., where the reference is the volume-weighted average price (VWAP) of trades between 1:45 p.m. and 2:00 p.m. Exchanges are required to publish the applicable VWAP ahead of the afternoon session.

The SEBI circular also emphasizes that risk management, settlement, and surveillance mechanisms in the block window must mirror those of the normal trading segment. These revised norms will take effect 60 days from the issuance of SEBI’s circular.

The implications of these changes are significant. By raising the minimum order size, SEBI filters out medium-sized transactions that no longer qualify for the block window, thereby focusing on genuinely large trades. Mandatory delivery rules prevent speculative reversals, ensuring that block deals reflect actual ownership transfers. The structured time windows, reference prices, and price bands reduce volatility risks and provide clarity for participants. Mandatory same-day disclosures improve accountability and deter manipulative practices, reinforcing market integrity. By extending the framework to T+0 settlements, SEBI ensures a consistent and robust trading environment across all large transactions.

Overall, SEBI’s overhaul of the block deal framework reflects its commitment to transparent, fair, and orderly markets, balancing the needs of institutional investors with the protection of retail participants and the broader market ecosystem.