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Block Deal Definition | Block Deal Meaning – The Economic Times

Definition of ‘Block Deal’ Block deal is a single transaction, of a minimum quantity of five lakh shares or a minimum value of Rs 5 crore, between two parties. Definition: It is a single transaction, of a minimum quantity of five lakh shares or a minimum value of Rs 5 crore, between two parties which are mostly institutional players. The transaction happens through a separate trading window. The deals happen in the beginning of trading hours for a time span of 35 minutes. Description: Block deal order consists of the following attributes: 1. An order may be placed for a minimum quantity of 5 lakh equity shares or minimum value of Rs 5 crore. 2. Every trade has to result in delivery and “Block Deal” orders cannot be squared off or reversed. 3. The price of a share ordered at the window should range within +1% to -1% of the current market price/previous day’s closing price, as applicable. 4. Transparent disclosure of trade transaction details such as the name of scrip, name of the clients (Buyer and Seller), quantity of shares bought/sold, and traded price have to be made by the broker to the exchange immediately. The exchange has to furnish all the transaction-related information to the public markets on the same day of the block deal transaction, after the closing of trading hours. For example , two FIIs (foreign institutional investors) want to trade 10% of a company’s total number of shares. As this transaction involves trading of a large quantity of shares, the risk factors entailing to this transaction are immense. Thereby, the exchange on which trading will happen, allocates a separate trading window for these two investors to exhibit a block deal, with the prime focus of prohibiting risk.
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