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September 10, 2025

SEBI proposes to raise the minimum block deal size from INR 10 crore to INR 25 crore to confine access to large institutional investors and curb speculative trades.
Price band widened to ±3% for non‑F&O stocks (while retaining ±1% for F&O stocks) to allow better price discovery in less liquid securities.

The Securities and Exchange Board of India (“SEBI”) has recently released a consultation paper¹ proposing revisions to the block deal mechanism, aiming to facilitate large-volume equity market transactions. A significant change envisaged in this consultation paper is the 2.5 times increase in the minimum order size of the block deal while bifurcating the price band into two sections. Block deals are a crucial feature of stock market infrastructure, allowing large trades to institutional investors and high-net-worth individuals in a controlled manner. These mechanisms are designed to prevent adverse impact on market prices from large transactions and to facilitate efficient clearing of significant positions. SEBI, as the market regulator, periodically revises the block deal framework to adapt to evolving market conditions, ensuring that the interests of all participants are safeguarded. This article dives deep into block deals and discusses the changes proposed by SEBI.

I. How do Block Deals work?

Block deal is execution of large trades through a single transaction without putting either the buyer or seller in a disadvantageous position. Unlike regular trade, block deals are executed through a dedicated window on major stock exchanges like the National Stock Exchange and Bombay Stock Exchange. The minimum size of a block deal in India currently is INR 10 crore (approx. USD 1.13 million), which distinguishes these trades from typical retail transactions. This basically means that for an investor to be eligible to do block deals, the deal size needs to be at least INR 10 crore.

These deals do not occur haphazardly throughout the trading day; instead, exchanges provide specific time slots or windows during which such large orders can be placed. Both buyer and seller must agree on the price, typically within a tight band around the current market price. This structured approach aims to prevent sharp fluctuations caused by sudden and large trades in the open market, which could otherwise disrupt fair price discovery and amplify volatility. The rationale behind using block deals is often to maintain confidentiality, minimize market rumors, and protect both parties from potential price shocks. For observers and retail investors, block deals drive the market sentiment and strategies of India’s largest market participants.

II. Current guidelines as per SEBI²

SEBI in December 2024, released Master Circular for Stock Exchanges and Clearing Corporations. Paragraph 1.2 of Chapter 1 of the above-mentioned Master Circular gives the current framework for block deals and mandates several key conditions for valid block deal transactions. Few of them are as follows -

Dedicated Trading Window: Block deals must be conducted within a special trading window, distinct from regular market trade. Currently there are two windows, namely, the morning window and the afternoon window. The morning windows should operate between 08:45 AM to 09:00 AM. On the other hand, the afternoon block deal window shall operate between 02:05 PM to 2:20 PM.
Minimum Size Requirement: As discussed above, the existing minimum trade size is set at INR 10 crore.
Price Band: Block deals can only be executed at a price range not exceeding ±1% of the prevailing market price or the previous day’s closing price.
Reference Price: The block reference price (“BRP”) is a reference price for execution of the block deals. The reference price for execution of block deals in the morning window shall be the previous day closing price of stock. The reference price for block deals in the afternoon window shall be the volume weighted average market price (“VWAMP”) of the trades executed in the stock in the cash segment between 01:30 PM to 02:00 PM³.
Transparency and Reporting: Exchanges are required to disseminate block deal data, including the scrip, quantity, price, and parties involved, to the public immediately after execution.
Compulsory Delivery: All trades executed as block deals must result in compulsory delivery. Squaring off or reversing trades is not permitted within this window.

Order matching for a successful block deal trade⁴: The rate and quantity should be exactly same as the opposite side block deal order for a block deal order to be successful. That means that the quantity and rate of the buy block deal order should be exactly similar to the quantity and rate of the sale block deal order. For example,

Example 1, Successful block deal trade -

Nature	Quantity	Price	Scrip
Buy block deal order	1,00,000	INR 1000	XYZ
Sell block deal order	1,00,000	INR 1000	XYZ

Example 2, Unsuccessful block deal trade as the quantities do not match even though the price does -

Nature	Quantity	Price	Scrip
Buy block deal order	1,00,000	INR 1000	XYZ
Sell block deal order 1	60,000	INR 1000	XYZ
Sell block deal order 2	40,000	INR 1000	XYZ

Cancellation of unmatched/ outstanding block deal orders: All unmatched/ outstanding block deal orders from both the morning and the afternoon windows shall be cancelled. These unmatched/ outstanding orders will not be carried forward to the next window sessions, i.e. the unmatched orders from the morning window will not be carried forward to the afternoon window and the unmatched orders from the afternoon window will not be carried forward to the next morning window.⁵ Additionally, these block deal orders cannot be traded partially either and will be cancelled.⁶ This provision was included to ensure that there are no leakages in the system and the same is not used to circumvent the law.
Modification /deletion for block deal orders: Modifications are permitted only for Rate, Quantity, and Client Code. Changes to other order attributes, like retention type or converting from a limit to a market order, are not allowed. However, traders can delete a pending block deal order and submit a new one.

These measures collectively create a robust regulatory environment that aims to prevent market manipulation, assure fair price discovery, and boost investor confidence.

III. Changes proposed in SEBI’s August 2025 Consultation Paper

To address evolving market needs, SEBI has released a new consultation paper in August 2025, proposing sweeping revisions to the block deal framework. The key changes focus on increasing the minimum threshold for block deals and altering the price bands, particularly for non-derivative stocks.

Increased Minimum Order Size

Under the proposed framework, SEBI plans to raise the minimum order size for block deals from INR 10 crore to INR 25 crore (approx. USD 2.83 million). The main objective of this increase is to restrict block deals to genuinely large, institutional transactions, discouraging smaller, speculative trades that can exploit the block deal mechanism for short-term gains. The higher threshold ensures that only major market participants and institutional investors will utilize the block deal facility, thereby enhancing market integrity.

This change is expected to curb speculative activity by excluding smaller trades from the block deal category, thereby minimizing opportunities for manipulation within this window. Furthermore, it will sharpen the focus on institutional investors, such as mutual funds and insurance companies, who regularly engage in large, strategic transactions. By raising the minimum order size, the mechanism aligns more closely with the interests of these serious market participants. Additionally, the higher threshold is likely to enhance market confidence by fostering greater transparency and building trust among all market participants.
Changes to the Price Band of Block Trades for Non-Derivative Stocks

Another critical revision pertains to the permissible price range for block deals in non-derivative stocks. Previously, trades in the block window were limited to a tight band of ±1% of the reference price. SEBI now proposes widening this band to ±3% for stocks that are not part of the derivatives segment (non-future & options stocks (“non-F&O stocks”)), allowing for greater flexibility in price discovery.

For stocks included in the F&O segment, the existing price band of ±1% will continue to apply. Maintaining the existing price band for F&O stocks was a deliberate decision designed to prevent manipulation through block deals, which could otherwise generate artificial demand to benefit from futures and options positions on the same stock or on indices influenced by the stock’s price volatility. The widened band for non-F&O stocks reflects generally lower liquidity and potentially higher volatility in such stocks, addressing stakeholder feedback and supporting smoother execution of large trades. SEBI also clarifies that all block deal trades must result in compulsory delivery, and exchanges will continue to report the details post-execution to uphold transparency.

IV. Impact on market

SEBI’s significant overhaul of the block deal mechanism through the proposed consultation paper is expected to have far-reaching repercussions for the Indian equity market. By raising the minimum trade size and relaxing price bands for certain stocks, SEBI intends to keep block deals a tool exclusively for institutional investors with legitimate strategic reasons, vastly reducing the likelihood of speculative abuse. The earlier ±1% limit on price movement from the previous day’s level was too restrictive, as it blocked both discounts and premiums on block trades. Expanding this range to 3% now provides buyers and sellers with greater flexibility in negotiating block pricing. For retail investors, these changes translate into more reliable market signals and improved transparency, as block deals will better reflect genuine investment motives from the market’s largest participants. Institutional investors and market makers, in turn, benefit from increased flexibility, especially in less liquid stocks, while preserving the essential pillars of fairness and regulatory oversight. Ultimately, SEBI’s revised block deal framework should enhance market confidence, encourage strategic participation from large stakeholders, and promote robust price discovery, thereby supporting the continued development and maturity of India’s financial markets.

Author

- M&A and Private Equity Team

You can direct your queries or comments to the relevant member.

¹https://www.sebi.gov.in/reports-and-statistics/reports/aug-2025/consultation-paper-on-review-of-block-deal-framework_96252.html.

²https://www.sebi.gov.in/sebi_data/commondocs/dec-2024/RE_Chapter%201%20-%20Trading%20-%20NEW_p.pdf.

³FAQ#4, BSE, Block Deal Window FAQs, https://www.bseindia.com/downloads/FAQ-Block_Deal.pdf.

⁴FAQ#12, BSE, Block Deal Window FAQs, https://www.bseindia.com/downloads/FAQ-Block_Deal.pdf.

⁵FAQ#7, BSE, Block Deal Window FAQs, https://www.bseindia.com/downloads/FAQ-Block_Deal.pdf.

⁶FAQ#13, BSE, Block Deal Window FAQs, https://www.bseindia.com/downloads/FAQ-Block_Deal.pdf.