Stocks exchanges revise enhanced surveillance measure framework

The stock exchanges have revised the stock surveillance actions under the Enhanced Surveillance Measure (ESM) framework. Now stocks under ESM Stage-II can trade on all trading days instead of once a week. In a circular, the exchanges said the revised framework would be effective from Tuesday, July 24, 2023.

ESM rules were introduced on June 4 for highly volatile micro-small cap companies with a market cap of less than Rs 500 crore. Many investors complained that they could not exit these stocks as they are traded once a week. A company Mercury EV Tech has challenged the new rule at the Securities Appellate Tribunal (SAT).

Stocks under Stage-I and Stage-II are settled through a trade-for-trade mechanism with a 100% margin. A price band of 5% or 2% in case the stock is already in a 2% price band has been assigned for stocks under ESM Stage-I, while Stage-II are traded under periodic call auctions at a price band of 2%.

Stocks of public sector enterprises and banks and stocks on which derivatives products are available will be excluded from the surveillance guidelines.