Regulatory Alerts2017-10-23
Treatment of Block Transactions and Orders with a Size Greater Than or Equal to the Normal Block Transaction Size – October 23, 2017
Issued by the Algerian Stock Market Supervisory Commission (COSOB) on October 23, 2017, this joint note clarifies the regulatory treatment of block transactions and large orders under Article 104 of the General Stock Exchange Regulations. It establishes that a block transaction requires simultaneous agreement on volume (equal to or exceeding the normal block size) and execution terms between buyer and seller intermediaries prior to exchange declaration. The directive further specifies that block authorization merely permits off-exchange execution with flexible pricing advantages rather than mandating it, and allows parties to instead submit full-volume orders directly to the central order book under standard market rules if they prefer not to utilize off-exchange benefits.
COSOB C o m m i s s i o n d ’ O r g a n i s a t i o n e t d e S u r v e i l l a n c e d e s O p é r a t i o n s d e B o u r s e 17, Campagne CHKIKEN.16043. Val d'HYDRA - Algiers. Tel: 023 47 27 93/47 28 03 Fax: 023 47 28 00/47 28 04 Commission for the Organization and Supervision of Stock Exchange Operations People's Democratic Republic of Algeria PEOPLE'S DEMOCRATIC REPUBLIC OF ALGERIA REF: DDSM/18/2017 Algiers, October 23, 2017 Joint Note to Stock Exchange Intermediaries (IOB) and Public Prosecution Officials Subject: Treatment of Block Transactions and Orders with a Size Greater Than or Equal to the Normal Size of a Block Transaction
To ensure a correct understanding of Article 104 of Regulation No. 97-03 of November 18, 1997, establishing the General Stock Exchange Regulations, as amended and supplemented, COSOB provides the following clarifications and details:
For reference, Article 104 stipulates: "A block transaction is considered to be a transaction involving a specified quantity of securities, agreed upon between the buying stock exchange intermediary and the selling stock exchange intermediary, and authorized according to the principles defined in these regulations."
Thus,
- A block transaction is defined as such when both of the following conditions are met simultaneously: a. It involves a security volume equal to or greater than the normal block size; b. Both the Buyer and Seller parties have agreed, prior to its declaration to the stock exchange, on the terms of the transaction.
- Authorization for a block transaction does not constitute an obligation to execute the transaction outside the central order book. The authorization is requested by the buyer and seller to benefit from the advantages (flexible price ranges) granted to block transactions executed off-exchange.
- Buy or sell orders involving a security volume equal to or greater than the normal block size may be submitted in full for execution in the central order book, in accordance with standard market rules, when the buyer and/or seller do not wish to benefit from the advantages provided for block transactions executed off-exchange.