Get App
Additional Surveillance Measures are set of rules introduced by SEBI along with the exchanges in India to prevent too much volatility in a security. The factor that are considered for shortlisting a security are price and volume variation, excessive concentration among few clients, variation between closing prices, market capitalization, delivery percentage, number of Unique PANs and price-to-earnings ratio
There are two types of ASM based on duration
- Long-term ASM
- Short-term ASM
Long-term ASM
The securities are placed in Long-term or Short-term ASM based on various factors. The steps to place a security under Long-term ASM is slightly elaborate compared to the steps that needs to be followed to place it under Short-term ASM.
There are four criteria that needs to be satisfied for a security to be placed under Long-term ASM. Once the security comes under this segment, the security can be placed in any of the four stages – Stage I, Stage II, Stage III and Stage IV.
The following are the various actions to be taken by clients based on different stages the stock is placed.
- Stage I: Applicable margin shall be 100% from T+3 day for all clients.
- Stage II: Reduction of price band to next lower level and applicable margin shall be 100% from T+3 day for all clients.
- Stage III: Further reduction of price band to next lower level and applicable margin shall be 100% from T+3 day for all clients.
- Stage IV: Settlement will be on Gross basis with 100% margin on all clients and 5% price band.
Review of stocks and Exit process from Long-term ASM list
Securities that have completed 90 calendar days in long term ASM list shall be eligible for exit from the list on a stage-by-stage process. The review of stocks will be on a weekly basis.
Stage-by-Stage Process
- Stocks in stage I shall be eligible for exit from Long-term ASM framework subject to such stocks not meeting the entry criteria of long term ASM.
- Stocks in Stage IV shall move to Stage III if such stocks do not meet the entry criteria for stage IV.
- Stocks in Stage III shall move to Stage II if such stocks do not meet the entry criteria for stage III.
- Stocks in Stage II shall move to Stage I if such stocks do not meet the entry criteria for stage II.
Short-term ASM
If a security is shortlisted and placed in Stage I of short-term ASM the following steps are taken
- A clarification will be requested from the company about any corporate announcement that has not been disseminated to market. The clarification received will be circulated to the market.
- A Surveillance dashboard shall also be displayed on the Exchange website mentioning the names of such stocks and other relevant details for the information of the
investors.
- Margin rate for the shortlisted stock shall be 50% or existing margin, whichever is higher, subject to maximum rate of margin capped at 100%.
If a security is short-listed and placed in Stage II of short-term ASM, then a margin rate for the shortlisted stock shall be 100%.
Review of stocks and exit process from short-term ASM list
- The stocks shall be retained in each stage as applicable for a minimum period of 5/15 trading days and shall be eligible for review from 6th / 16th Trading day onwards.
- A stock will exit the Short-term ASM framework, if a stock is not meeting entry criteria on the review date.
- As long as a stock continues to meet the criteria for Short-term ASM without slipping into Long-term ASM list, the stock will continue to be subjected to the Stage II ASM framework.
- Once the stock moves to Long-term ASM framework, the above mentioned Short-term ASM criteria shall not apply to the stock.
Securities that are excluded from ASM list
- Government owned companies that are categorized as Public Sector Enterprises and Public Sector Banks
- Securities which are already under Graded Surveillance Measure (GSM)
- Securities for which derivative products are already present
- Securities already under Trade for Trade segment
To read more about Graded Surveillance Measures, click here