Business Daily from THE HINDU group of publications
Monday, Aug 18, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Monday, Aug 18, 2008 ePaper | Mobile/PDA Version | Audio |
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Stock Markets Markets - Stocks Columns - For the Asking What is the difference between bulk and block deals in a stock exchange? Murali Manohar, email Though at times used rather loosely as meaning the same thing, there is a difference. A broker is required to report a transaction for more than five lakh shares or for more than Rs 5 crore to the Bombay Stock Exchange. Such a transaction may be for buying or selling. In a bulk deal while the buyer/seller may be one, the counterparty would be more than one, often several. Whereas in a block deal the transaction is between two parties, a buyer and a seller. The stock exchange is required to be notified when two parties do this by trading more than 0.5 per cent of shares of the company. It is the block dealing facility of stock exchanges that have come for criticism by some people because this goes against the spirit of a public trading platform. A public trading platform in their view should not be made available for consummating private deals. In India, promoters of many family controlled companies have used this facility not only to disentangle cross-holdings and to carve out well-defined and demarcated empires but more importantly to avoid long-term capital gains tax which is possible only when deals are done through a recognised stock exchange in India. S. MURLIDHARAN More Stories on : Stock Markets | Stocks | For the Asking
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