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General Manager Market Regulation
Department – Policy Email:- MRD/DoP/SE/Cir- 19 /05 The Executive Directors/Managing Directors/ Administrators of all Stock Exchanges Dear Sir / Madam, Sub: Guidelines for execution of block deals on the stock exchanges 1.
SEBI
had issued a circular (reference no. SEBI/MRD/SE/Cir-7/2004) on January 14,
2004 on disclosures of details of “bulk”
deals with a view to impart greater transparency to the market on such
transactions executed on the stock exchanges. In terms of paragraph 1.1 of that
circular, a “bulk” deal constituted of
“all transactions in a scrip (on
an exchange) where total quantity of shares bought/sold is more than 0.5% of
the number of equity shares of the company listed on the exchange”.
Thus the quantitative limit of 0.5% could be reached through one or more
transactions executed during the day in the normal market segment. 2.
There
is however a felt need of the market to execute large trades through a single
transaction easily without putting either the buyer or the seller in a
disadvantageous position. In order to facilitate execution of such large
trades, the stock exchanges are being permitted to provide a separate trading
window. A trade, with a minimum
quantity of 5,00,000 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” as distinguished from “bulk” deal defined earlier. 3.
A
“block” deal will be subject to the following conditions : a. The said trading window may be kept
open for a limited period of 35 minutes from the beginning of trading hours
i.e. the trading window shall remain open from b. The orders may be placed in this
window at a price not exceeding +1% from the ruling market
price/previous day closing price, as applicable. c. An order may be placed for a minimum
quantity of 5,00,000 shares or minimum value of Rs.5 crore. d. Every trade executed in this window
must result in delivery and shall not be squared off or reversed. e. The stock exchanges shall
disseminate the information on block deals such as the name of the scrip, name
of the client, quantity of shares bought/sold, traded price, etc to the general
public on the same day, after the market hours. f.
There
is no change in regard to the disclosure of trade details of ”bulk deals” as
specified in the earlier SEBI circular reference no. SEBI/MRD/SE/Cir -7/2004
dated 4.
The
stock exchanges shall ensure that all appropriate trading and settlement
practices as well as surveillance and risk containment measures, etc., as
presently applicable to the normal trading segment are made applicable and implemented in respect of
the proposed special window also. 5. The stock exchanges are advised to a. make necessary amendments to the
relevant bye-laws, rules and regulations for the implementation of the above
decision immediately. b. bring the provisions of this circular to
the notice of the member brokers/clearing members of the Exchange and also to
disseminate the same on the website. c. communicate to SEBI, the status of the
implementation of the provisions of this circular in the Monthly Development
Report for the month of September 2005. 6.
This
circular is being issued in exercise of powers conferred under Section 11 (1)
of the Securities and Exchange Board of India Act, 1992, to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market. Yours
faithfully, V | |