The Securities and Exchange Board of India is considering important changes to the way large trades are executed in the stock market. In a new consultation paper, SEBI has proposed to increase the minimum size of block deals from the current ten crore rupees to twenty five crore rupees. At the same time, the regulator wants to widen the permissible price band for non F&O stocks from one percent to three percent of the previous close. For F&O stocks, the one percent band will remain unchanged because these securities already enjoy higher liquidity.
Block deals are large transactions that are carried out through a special trading window to ensure that neither the buyer nor the seller suffers from sudden price movements. They are meant to facilitate bulk trades without disrupting the market. SEBI’s consultation paper notes that every trade executed through this window must result in actual delivery and cannot be squared off or reversed.
Industry experts believe that this proposal is well timed. Prakarsh Gadgani, CEO of Torus Digital and former CEO of 5Paisa, said the changes are fair given the sharp rise in liquidity and trading volumes in recent years. In his view, keeping the F&O stocks at the existing price band makes sense as the depth in those counters absorbs large trades more effectively.
The move is also seen as a way to deepen the cash market. K Suresh, president of the Association of National Exchange Members of India, explained that increasing the size of block deals will encourage smaller trades to remain in the regular cash market, thereby boosting overall participation and liquidity. The expectation is that SEBI may also introduce a separate framework in the future for block deals in small and medium enterprise stocks.
The regulator has taken into account the views of market participants, the recommendations of the Secondary Market Advisory Committee, and its own internal deliberations before releasing the proposal. Stakeholders have been invited to share their feedback by September 15, after which the regulator will decide the way forward.
The potential impact of these changes is significant. Larger block deals would mean more efficient handling of big trades by institutions, while the wider price band for non F&O stocks would allow greater flexibility in execution. For investors, this could improve transparency and stability, although much will depend on how exchanges implement the new framework.
As Indian capital markets continue to expand, SEBI’s proposed reforms are part of a broader effort to align regulations with growth, enhance liquidity, and make trading smoother for both large institutions and retail participants.
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