First, a block deal has to happen through a separate window to be provided by the stock exchanges. This window is not open throughout the day, but, only for 35 minutes during the day, wherein the block deal has to take place. Now, the buyer and the seller have to ensure that the price agreed upon will not be plus or minus 5 per cent, from the ruling price or the previous day's price.
Also, every trade executed in this window must result in delivery and shall not be squared off or reversed.
SEBI requires that the stock exchanges disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought/sold, traded price, etc to the general public on the same day, after the market hours.
An order may be placed for a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore.
Since block deals were permitted they have been very popular on the exchanges. Large block deals are negotiated by institutional investors, including domestic funds and foreign institutional investors.