By Admin 
SEBI New Rule: Market regulator SEBI has made the rules related to block deals more stringent. Under this, the minimum order size for block deals has been increased from Rs 10 crore to Rs 25 crore. SEBI has allowed increasing the price range for non-derivative shares to 3 percent, while futures and options shares will be retained within the existing range of 1 percent. According to CNBC report, SEBI has adjusted the floor price for block deals, which can go up or down by 3 percent from the previous day’s closing.
Why was the size of the block deal increased?
This was announced through a circular on Wednesday. SEBI believes that as the market size increases, the minimum size of block deals should also increase. It also has many benefits such as it will prevent activities like speculation, increase transparency in the market, reduce the possibility of price manipulation through big deals, through this it will encourage big institutional investors or high priced trades, which will increase liquidity in the market. Let us tell you that lump sum buying and selling of shares in large quantities is called black deal.
Two windows for block deal
SEBI has kept two windows for block deals. The first window is from 8:45 am to 9:00 am, in which the floor price will be set at the previous day’s closing price. The second window is from 2:05 pm to 2:20 pm, in which the trading volume weighted average price (VWAP) will be used in the cash segment from 1:45 pm to 2:00 pm. Stock exchanges will share VWAP information between 2:00 pm and 2:05 pm.
Another big decision of SEBI
Keeping in mind the interest of investors, SEBI has also proposed to fix the limit on brokerage and transaction fees charged by mutual fund companies. According to the new rules of SEBI, mutual fund companies will no longer be able to charge brokerage or transaction fees from investors other than the total expense ratio.
Mutual fund companies object to the decision
This will reduce the burden on investors to a great extent. However, mutual fund companies are unhappy with this decision of SEBI considering the possibility of impact on profitability. Let us tell you that Total Expense Ratio is the amount which is charged by fund houses from investors for fund management, operational cost, research etc. SEBI has reduced its limit for cash market from 0.12 percent to 0.2 percent. Whereas for the futures section it has been reduced from 0.05 percent to 0.01 percent.
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