Block deal
A single large trade of at least Rs 25 crore, executed in a special exchange window within 3 per cent of a reference price, settled by delivery and disclosed after market hours.
In plain language
A fund that wants to sell Rs 300 crore of one company's shares has a problem. Put that order in the open market and the price falls before it is filled — the seller gets a worse price and everyone watching sees what is happening.
A block deal solves it. Buyer and seller agree price and quantity between themselves, then put the trade through the exchange in a special trading window that normal market participants cannot see. The trade still happens on the exchange, with its settlement guarantee — it just happens in one piece, away from the order book.
How it works
Section 4.5.4 gives the framework, citing SEBI's circular of 8 October 2025 reviewing block deals:
| Feature | Rule |
|---|---|
| Minimum order size | Rs 25 crore |
| Execution | A single transaction in a special window |
| Morning window | 8.45 am to 9.00 am; reference price = previous day's closing price |
| Afternoon window | 2.05 pm to 2.20 pm; reference price = volume-weighted average price of trades from 1.45 pm to 2.00 pm |
| Price limit | Order price within ±3 per cent of the reference price |
| Settlement | Actual delivery — cannot be squared off or reversed |
| Visibility | Not visible to participants in the normal window |
| Disclosure | Details disseminated to the public after market hours on the same day |
Why it exists. Executing large orders in the open market could distort the price and fill the order on unfavourable terms; a separate window lets the parties preserve the confidentiality of the deal.
A worked example
Illustrative figures. A foreign portfolio investor agrees to sell 20 lakh shares of a company to a domestic mutual fund. The share closed yesterday at Rs 1,500.
Deal value = 20,00,000 × Rs 1,500 ≈ Rs 300 crore (above the Rs 25 crore minimum)
Morning window = 8.45 am to 9.00 am
Reference price = Rs 1,500 (previous close)
Permitted range = Rs 1,500 ± 3% = Rs 1,455 to Rs 1,545
They agree Rs 1,470 — a 2 per cent discount, inside the range. The orders are matched in the block window, the fund must take delivery and the FPI must deliver; neither can square off.
If they miss the morning window and trade at 2.10 pm, the reference is the VWAP from 1.45 pm to 2.00 pm — say Rs 1,520, giving a range of Rs 1,474.40 to Rs 1,565.60. Rs 1,470 would now be outside it.
That evening the exchange publishes the deal. Next morning the market knows who sold and who bought — but not until the trade was done.
Why NISM asks about it
Chapter 4 (Secondary Markets), section 4.5.4, sets block deals beside bulk deals. The figures are the question: Rs 25 crore, the two windows and their reference prices, ±3 per cent, compulsory delivery, and same-day disclosure after market hours.
Common exam traps
- Block deal = one large trade in a special window. Bulk deal = total quantity above 0.5 per cent of listed shares, in the normal market, possibly across many trades.
- The morning reference is yesterday's close; the afternoon reference is the 1.45–2.00 pm VWAP.
- ±3 per cent of the reference price, and Rs 25 crore minimum — both from the workbook's cited October 2025 review; older material quoting smaller figures is out of date.
- Delivery is compulsory. A block deal cannot be squared off or reversed.
- Not visible in the normal window, but disclosed the same day after market hours — confidential during execution, not secret.
Check yourself
1.Which statement about block deals is correct?
- a)The minimum order size is ₹5 crores and they may be squared off intra-day
- b)The minimum order size is ₹25 crores, the price must be within +/- 3 percent of the reference price, and they must be settled by actual delivery
- c)They take place in the normal trading window and are visible to all participants
- d)They are never disclosed to the public
Show the answer
Answer: (b) The minimum order size is ₹25 crores, the price must be within +/- 3 percent of the reference price, and they must be settled by actual delivery
The minimum order size for a block deal is ₹25 crores. The difference between the order price for a block deal and the reference price should not be more than +/(-) 3 percent. And all block deals are required to be settled by actual delivery and cannot be squared off or reversed.
Option C describes a bulk deal, which takes place in the normal trading window at any time during trading hours and is visible to all market participants, and is defined by quantity exceeding 0.50 percent of the total number of equity shares of that company listed on the exchange.
Option D is wrong: stock exchanges are required to disseminate all details of block deals to the general public after the market hours on the same trading day. The special window protects confidentiality during execution, not afterwards.
The windows: the morning window from 8.45 am to 9.00 am with the previous day's closing price as reference, and the afternoon window from 2.05 pm to 2.20 pm with the volume-weighted average price of trades executed from 1.45 pm to 2.00 pm as reference.
Where this is taught
- Series VII · Chapter 3: Introduction to Securities Broking Operationsintroduced here
- Series XII · Chapter 4: Secondary Marketsintroduced here
Related terms
- Bulk dealAll transactions in a listed stock where the total quantity bought or sold exceeds 0.50 per cent of the company's listed equity shares — in one trade or several in a day — reported and disclosed the same day.
- Co-locationA stock exchange facility, offered to trading members for a fee, to place their computer servers in the same premises as the exchange's servers so their orders reach the exchange faster.
- Circuit breakerA pre-set percentage move in a stock or index that triggers an automatic halt or limit in trading, giving the market time to assess instead of trading on panic.
- Price bandThe highest and lowest price at which a contract may trade on a given day, set as a percentage of its base price to block erroneous and manipulative orders.
- Active orderAn order to buy or sell at the prevailing market price, which matches immediately against an order already resting in the order book — draining liquidity rather than adding to it.