Bulk Deals:
A single transaction or set of transactions in which the total traded quantity bought/sold under any single client code is more than 0.5% of the number of equity shares of a listed company. Stock brokers need to disclose all the bulk deals information to the exchange on a daily basis through DUS (Data Upload Software).
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.
Block Deals:
The definition of block deals provided by the Securities and Exchange Board of India (SEBI) is as follows:
A trade, with a minimum quantity of five lakh shares or a minimum value of Rs 5 crore, executed through a single transaction through a separate window of the stock exchange constitutes a block deal. Stock brokers are required to make a disclosure on a daily basis through DUS (Data Upload Software) regarding Block deals.
SEBI came out with guidelines pertaining to block deals in September 2005.
* A separate trading window would be kept open for a limited period of 35 minutes from the beginning of trading hours: 9.55 am to 10.30 am
* Orders should be placed at a price not exceeding +1% or -1% from the ruling market price or previous day’s closing
* An order should be for a minimum quantity of five lakh shares or minimum value of Rs 5 crore
* Every trade executed must result in delivery and shall not be squared off or reversed.
* Stock exchanges should disseminate the information on block deals to the general public on the same day after market hours. This should contain information bits like name of the scrip, name of the client, quantity of shares, traded price and so on.
Sathish Emmadi
Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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{ 6 comments… read them below or add one }
what is normal deal.
can u give more information on bulk deal and block deal.
and in M&A what kind of deal take place , bulk ,block,normal ?
There are different types of M&As and different ways to achieve them. I will try to cover them in future articles.
To answer your specific query,most of the times (excluding off market transactions) it depends on the market price of the target company at the time of exercising the transaction. If there is a big difference in the market price and negotiated price then it happens through ‘bulk deals’. The reason is obvious from the definition of block deal.
‘Orders should be placed at a price not exceeding +1% or -1% from the ruling market price or previous day’s closing’.
Usually in M&A transaction the target firm share price goes up by more than 20%. This is not possible in a block deal. But if the share price increases to the desired level after the announcement has been made, it can happen through block deal.
I have never come across the term ‘normal deal’ regarding M&A. If there is no abnormal benefits (offer price/exchange ratio) to target firm (benefits of the acquiring firm will be known in the future) the M&A transaction is said to be a normal deal. This is my view.
well well……..its gud but it can be improved…..never the less ..keep it up…..
Can you please provide me some more information on Block deal and as well as bulk deal so that it help me in understanding it in a much better way.
kindly send me the bulk deals
Harshan,
http://www.bseindia.com/mktlive/market_summ/bulk_deals.asp
Daily bulk deals are posted here by BSE.