Additional Surveillance Measures

Securities and Exchange Board of India and exchanges are working hard to protect the investors money. They review the situation from time to time and always come with the best possible measures.

They had come up with some new measures which are known as Additional Surveillance measures. These measures are change time to time and also depend on the stock. Let’s take a look at it in detail.

Additional Surveillance Measures

In an attempt to improve market credibility and protect investors’ interests, SEBI and exchanges have introduced multiple improved proactive surveillance measures from time to time. This includes price band reductions, periodic call auctions, and the transfer of securities to the Trade for Trade segment.

Following those measures which are already in place, The Securities and Exchange Board of India introduced Additional Surveillance Measures on equities. Additional Surveillance Measures are depending on factual factors including price/volume variation, volatility, and etc. This is also known as ASM.

What is ASM List?

ASM list is the list of securities which are currently under Surveillance due to Price , Volume variation, Volatility etc. Exchanges (NSE and BSE) release this list periodically after SEBI’s order. You can find the ASM list on below links:

• ASM List NSE
• ASM List BSE

Parameters considered while preparing a ASM list

The selection of securities for inclusion in ASM is determined on a realistic approach by SEBI and the exchanges, and it includes the mentioned parameters:

• High Low volatility
• Client Concentration
• Closure to Closure Price Variation
• Market Capitalization
• Volume Variation
• Delivery %
• No. of Specific PANs
• PE

Type of Additional Surveillance Measures(ASM)

• Additional long-term surveillance measures
• Short term additional surveillance measures

Example of Additional Surveillance Measures

When a share is trapped in the ASM List, it is subjected to plenty of new exchange regulations surrounding intraday price volatility.

Stock will be moved into a 5% price range the next day after being added to the monitoring list today. It can only fluctuate 5% in each direction from the previous day’s final price.

If the share slides below the 5% limit, trading will be suspended for the rest of the day.

Stock  will demand 100% margin money starting on the fifth trading day.

If the PE ratio of a stock on the surveillance list rises above 100, it will be shifted to trade-to-trade settlement.

Trading in Stocks which are under ASM List

• The listed equities will be reviewed continuously based on predetermined objective standards, and once the conditions are met, they will be moved to the Trade for Trade category.
• Margin will be banned at 100% of the traded value, i.e. there will be no Intraday leverage (MIS/BO/CO is not allowed).
• Shares held in ASM cannot be pledged.

Corporate Actions during a stock is under ASM

A stock’s ASM status has no bearing on corporate actions. Even if the equity is under ASM, all corporate actions such as bonuses, dividends, stock splits, and other advantages are delivered to the shareholders.

Pledged Stock under ASM

In the event that a share you have pledged is placed under ASM, you will no longer be offered collateral margins for that share, as ASM requires a 100% margin. The amount of collateral obtained against that stock will be deducted from the collateral value (visible on the trading platforms).

Until the share is transferred out of ASM, you can either unpledge it or hold it pledged without collateral.

Coming out From ASM

If the stock is genuine & no fraud as taken place mostly the stock came out of ASM list on the next meeting of SEBI & the exchanges.

GSM

A graded surveillance measure is a means to keep a watch on inflated prices and an unexpected surge in demand for a business’s shares that aren’t in line with the financial performance and stability of the company.

The system divides corporations into grades in order to warn investors about possible stock price manipulation. The warning continues if the regulator sees extraordinary stock price movements that could put the company in the “shell company” category. This method can help investors figure out which stocks to avoid.

GSM category stocks include Ankit Metal & Power Limited, Balkrishna Paper Mills Limited, and Cox & Kings Limited.

Read more about GSM

Conclusion

These measures are in favor of the investors as investors can lose their hard money if something bad is going on in that stock. Always keep a track of ASM list as a Sensible investor. Stocks which goes under asm category are not always bad stock sometime due to some news stock also fall under this category.

This is all from our side regarding Additional Surveillance Measures. Let us know your views about asm stage 2 means in the comment section.

Other Interesting blogs related to Additional Surveillance Measures:

Graded Surveillance Measure : GSM Category

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Security is not Allowed to Trade in This Market

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