The Securities and Exchange Board of India (SEBI) is reviewing its block deal framework, with proposals to raise the minimum order size from the current ₹10 crore to ₹25 crore. The move aims to bring greater efficiency, reduce speculative misuse of the window, and align the mechanism more closely with its original purpose—facilitating large, institutional-level trades with minimal market disruption.
Why the Revision is Being Considered
Block deals were introduced as a way to execute large trades in a transparent and orderly manner. Over time, however, regulators observed that the lower entry threshold enabled more mid-sized players to use the facility, sometimes for speculative positioning rather than strategic investment.
Raising the floor to ₹25 crore would narrow access, ensuring that only serious institutional trades qualify. This could also reduce the risk of short-term volatility spilling into broader markets.
Impact on Market Participants
For institutional investors such as mutual funds, sovereign wealth funds, and large insurers, the revision is unlikely to pose hurdles, as their trade sizes already exceed the proposed limit.
However, for mid-tier investors and some high-net-worth individuals, the higher threshold may limit access. SEBI’s expectation is that such trades can still be routed through regular market mechanisms without distorting liquidity.
Larger institutions will continue benefiting from reduced impact costs.
Smaller players may need to adjust strategies, relying more on negotiated deals outside the block window.
Broader Market Implications
A tighter block deal framework could strengthen transparency and confidence in India’s equity markets. By limiting speculative misuse, SEBI aims to preserve the credibility of the mechanism.
It also complements other reforms being considered to modernize equity markets, including extending derivative maturities and revisiting IPO regulations. Together, these measures point to SEBI’s focus on stability, maturity, and global competitiveness.
Why This Matters
This potential revision is not just a procedural update—it signals SEBI’s intent to reinforce institutional trust and ensure that regulatory tools serve their original purpose.
For markets, it promises lower volatility around block deals. For regulators, it enhances credibility. And for investors, it reflects an environment where long-term capital formation is prioritized over short-term speculation.
