SEBI issued consultation paper for changes in rules, what are the proposals:

News Topical, Digital Desk : The Securities and Exchange Board of India (SEBI) on Friday released a consultation paper for the block deal framework. Through the paper, SEBI has proposed changes in the mechanism. In this consultation paper, proposals have been made for everything from reference price to minimum order size for the deal.

What is special in the consultation paper

Under the new proposal, block deals for stocks included in the F&O segment will have to be done within 1% of the reference price, while for stocks that do not come under F&O, this limit has been kept at 3%. The duration of reference price for different trading windows will be 30 minutes. In the morning trading window which will be from 8:45 AM to 9:00 AM, the reference price of the block deal will be the VWAP of the last 30 minutes of the previous day's closing. For the afternoon window which will be from 2:05 PM to 2:20 PM, the reference price of the block deal will be the volume-weighted average price (VWAP) of the transactions done in the cash segment from 1:30 PM to 2:00 PM, earlier this duration was 15 minutes. The exchange will calculate and release the VWAP between 2:00 PM to 2:05 PM.

What is the proposal on order size? SEBI has proposed that the minimum order size of block deal will be Rs 25 crore. Which is currently Rs 10 crore. Along with this, delivery of shares will be mandatory in every transaction, they cannot be squared-off or reversed. Apart from this, stock exchanges will have to ensure that the information related to the block deal - such as the name of the scrip, the name of the client, the number of shares bought / sold and the trading price - is made public after the market closes on the same day.

What are block deals It is worth noting that block deals are pre-decided deals between large institutional investors or big traders, which are completed within a limited time period and under strict rules so that there is no sudden sharp fluctuation in prices due to big deals. SEBI has sought answers on the proposals by September 15.