← Policy & Regulation: Financial & market regulation (all topics)
Exchange surveillance measures (ASM, GSM, ESM)
What it is
NSE and BSE run three graded frameworks - Additional, Graded and Enhanced Surveillance Measures - that move stocks showing abnormal price or volume behaviour into tighter trading conditions. ESM targets small and micro caps, generally below Rs 1,000 crore market capitalisation
Stages escalate from 100% margin and a 5% band to trade-to-trade settlement, periodic call auction, weekly-only trading and finally square-off only
Impact on industries
- Trade-to-trade settlement removes intraday liquidity entirely - every trade must be delivered, so the speculative float supporting the price disappears
- An Additional Surveillance Deposit of 50% rising to 100% of trade value makes buying prohibitively expensive at the higher stages
- Inclusion is itself a signal, and institutional and margin-funded money exits on it regardless of the underlying business
- Triggers are objective and published, so inclusion reflects price behaviour against disclosure rather than a finding of wrongdoing
Industries affected
Holding & Core Investment-Small/Micro Holding Shells
Securities Broking-Small/Regional & Investment Shells
Castings & Forgings-Trade-to-Trade & SME Shells
Hotels & Resorts-Small & Regional-Trade-to-Trade & SME Shells
IT Services-Small (Services & Consulting)-Micro/SME & Shells
NBFC-Small/Micro Lenders-Trade-to-Trade & SME Shells
Paper & Paper Products-Trade-to-Trade & SME Shells
Pharmaceuticals-Small-Trade-to-Trade & SME Shells
Realty-Small (Active Developers)-Trade-to-Trade & SME Shells
Textile-Cotton Spinning & Yarn-Micro/SME & Shells
Textile-Integrated/Composite Mills-Micro/SME & Shells
Textile-MMF Yarn Spinning, Texturising & Processing-Micro/SME & Shells
Gems & Jewellery-Jewellery-Trade-to-Trade & SME Shells