FPIs want Sebi to relax ‘restrictive’ block deal rules

Posted on April 20, 2017

Asia Securities Industry & Financial Markets Association, ASIFMA, a governing body that represents foreign portfolio investors, FPIs want Securities and Exchange Board of India SEBI to relax “restrictive” block deal rules. Under this, ASIFMA expected SEBI to extend the time constraints of the deals that have been blocked and relax the limits of the orders that have been released by SEBI so far.

What is a Block deal?

By Block deal we mean, trading worth Rs.5 crore or shares worth Rs. 5 lakh using Block deal window. This trading is usually done via a single transaction only. You can use this Block deal window in morning only and that too for 35 minutes time only. Whenever you initiate any transaction, it will simply be executed on a delivery basis and the sale price of the share would vary from +1 to-1 percent of the transaction price of the share the previous day or the current day.

Block deal is closed only after the confirmation of both the parties involved in the dealing. After successful completion of the deal, the information is sent to the stock exchange. There is a normal trade window as well but if you are doing your transactions via block deal window, then your transactions and orders would not be visible to the traders who buy or sell shares via normal trade window.

Most of the real-time investors, FPI, organizations, mutual fund houses, banks, financial institutes, promoters, trade through Block deal window only.

According to ASIFMA, SEBI is not interested in giving more services to the traders using block deal window. This is one of the major concerns that SEBI must think, as it is really impacting the growth of our country.

To this FPI trading desk head further said that they have to really face very hard time when the traders use block deal window for a limited time period. Due to this, Stress on Indian stock exchanges have increased and even stopped FPI when thinking of trading in countries like India.

FPI shares sale and purchase is on a larger scale so they hardly expect India, with such a restrictive Block deal window, a place to make an investment.

FPIs want Sebi to relax ‘restrictive’ block deal rules