Block deal is a trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs. 5 crores, executed through a single transaction, on the special “Block Deal window”. The window is opened for only 35 minutes in the morning trading hours.
Market regulator SEBI (Securities Exchange Board of India) has also made it mandatory for the stock brokers to disclose on a daily basis the block deals made through Data Upload Software (DUS).
Usually Block Deals happen when two parties agree to buy or sell securities at an agreed price between themselves and inform the stock Exchange. The orders in a block deal are not shown to the people who trade from normal trade window.
Stock exchanges should disclose the information on block deals to the public on the same day after market hours. This should contain information bits like name of the script, name of the client, Quantity of shares, trade price and so on.
According to SEBI, to facilitate block deals, stock Exchanges provide a separate trading window for only 35 minutes in the beginning of the trading hours.
The transaction price of a share ranges from +1% to -1% of the previous day’s closing or the current market price. These transactions take place on delivery basis.
According to SEBI guidelines, shares transacted under the window of block deal should not be squared off or reversed. Also, the stock Exchanges are required to disclose the information on block deals.
Bulk deal is a trade, where total quantity bought or sold is more than 0.5% of the number of equity shares of the company. The orders in a block deal are not shown to the people who trade from normal trade window. Bulk orders, on the other hand, are visible to everyone.
Bulk deals can be transacted by the normal trading window provided by brokers throughout the trading hours in a day. Bulk deals are market driven and take place throughout the trading day.
If the bulk deal happens through a single trade, it should be notified to the exchange immediately upon the execution of the order. If it happens through multiple trades, it should be notified to the exchange within one hour from the closure of the trading.