The Hindu Business Line : SEs told to keep separate window for block deals

IN order to facilitate the execution of large trades through a single transaction, the Securities and Exchange Board of India has asked stock exchanges to provide a separate trading window for block deals.

A trade, with a minimum quantity of five lakh shares or minimum value of Rs 5 crore executed through a single transaction on this separate window of the stock exchange will constitute a `block deal', according to a SEBI notification released on Friday.

This may be differentiated from `bulk deals', in which all transactions in a scrip (on an exchange) where total quantity of shares bought or sold is more than 0.5 per cent of the number of equity shares of the company listed on the exchange.

The block deals window would be kept open for a limited period of 35 minutes from the beginning of trading hours, that is from 9:55 a.m. to 10:30 a.m.

The orders placed in this window must be at a price not exceeding (or lower than) 1 per cent from the ruling market price or the previous day's closing price, whichever is applicable, SEBI says.

Every trade executed in this window must result in delivery and cannot be squared off or reversed.

The stock exchanges will disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought or sold, and traded price to the general public on the same day, after the market hours, according to the notification.

SEBI has also sought the discontinuation of hand delivery bargains and delivery versus payment systems. Now, all transactions executed on the stock exchanges will be settled through the Clearing Corporation/House of the stock exchanges. In order to give the institutional investors, custodians and other market participants some time to change over to this practice, this notification will come into effect from September 19.

SEBI also said that hand delivery bargains may be retained under very exceptional circumstances. These exceptions would be in cases of total connectivity failure to the exchanges, international holidays that may be decided upfront by the stock exchanges in consultation with the custodians or closing down of national or international centres due to calamities.

Following this decision, SEBI has revised the existing time limit for custodial confirmation from 11.00 a.m. to 1.00 p.m. Consequently, the time limit for processing and downloading the obligation files by the clearing corporation or clearing house of the stock exchanges to the brokers and custodians has been revised from 1.30 p.m. to 2.30 p.m.

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