ET Explainer: What are block and bulk deals?

Block and bulk deals are large transactions that are executed on the stock exchanges. While block deals happen through a special trading window on the exchange that is not visible to all, bulk deals are done as part of the normal trading and can be seen by everyone.

What qualifies as a block deal and which as a bulk one ?

A block deal is a single trade where either a minimum of five lakh shares are transacted, or the total transaction value is at least ₹10 crore. A bulk deal occurs when a transaction involves more than 0.5% of a company’s total equity shares.

Who are the participants in block and bulk trades?

Large investors are the participants in such trades. Company promoters, high net worth individuals (HNIs) and institutional investors, such as mutual funds, hedge funds, foreign funds and private equity firms, can be the participants.Why trade through block deals?Block deals offer exclusivity, efficiency and privacy for big trades since they are done through a special window. When large deals happen during normal trading, it tends to have an impact on the stock prices, resulting in confusion among investors. Block deal windows help the smooth execution of such big activity without disruptions. They are also more tax efficient than off market transactions.How are these deals executed?

Block deals are executed through a special trading window called the block deal window, which operates from 8:45 am to 9:00 am in the morning and from 2:05 pm to 2:20 pm in the afternoon. Bulk deals are carried out during regular trading hours, from 9:15 am to 3:30 pm.

How do block and bulk deals impact stock prices?

Since block deals occur in separate trading windows, they do not affect the stock price in real time. They are executed at a pre-determined price following negotiations between the investors, which may differ from the current market price. Bulk deal transactions happen during regular trading hours, affecting the stock price in real time. Although they generally have a smaller impact compared to block deals, multiple bulk orders tend to influence traders’ sentiment.

How does order matching happen for block and bulk deals?

For a block deal to be executed, both the buy and sell orders must have the same quantity and price. Once an order is placed in the block deal window, it remains active for only 90 seconds. Bulk deals are executed during regular trading hours, their matching and execution happen real-time based on the prevailing market prices.

Where can investors find the block and bulk deal details?

Deals executed on BSE can be viewed under the equity section of markets. NSE publishes both block and bulk deals data in the daily markets reports section of market data/trade information/get markets data.