1 November, 2017
On October 26, 2017 SEBI issued a circular (“Circular”), by virtue of which norms for conducting block deals on stock exchanges now stand amended. This circular is to come into effect from January 01, 2018.
Origin: SEBI had introduced the concept of block deals by its circular dated September 02, 2005 whereby it introduced a single separate window of 35 (Thirty-Five) minutes, during which large orders comprising of a minimum of 500,000 (Five Hundred Thousand) shares or of a minimum value of INR 50,000,000 (Rupees Five Crores) could be traded.
Present Circular: As per the Circular there would now be 2 (two) trading windows in the morning and in the afternoon. Each window would last for a duration of 15 (Fifteen) minutes. The reference price for execution of block deals in the morning window shall be the previous day closing price of the stock.
The reference price for execution of block deals in the afternoon window shall will be the volume weighted average market price (VWAP) of the trades executed in the stock in the cash segment between 01:45 PM to 02:00 PM. The orders placed shall be within ±1% of the applicable reference price. In addition to this, SEBI has also increased the minimum order size to INR 100,000,000 (Rupees Ten Crores) while not specifying any minimum number of securities, which would be considered to be a block.
For more information, please contact:
Sameer Sibal, Partner, Jerome Merchant + Partners
sameer.sibal@jmp.law
