Graded Surveillance Measures (GSM):
This is with reference to NSE Circular NSE-SURV-34262, BSE Circular20170223-44 & MSEI Circular MSEI-SURV-4942 dated 23 February 2017 on Graded Surveillance Measures for rading in securities in the exchange platform.
Securities and Exchange Board of India (SEBI) and Exchanges in order to enhance market integrity and safeguard interest of investors, have been introducing various enhanced pre-emptive surveillance measures such as reduction in price band, periodic call auction and transfer of securities to Trade to Trade category from time to time. The main objective of these measures is to;
• alert and advice investors to be extra cautious while dealing in these securities and
• advice market participants to carry out necessary due diligence while dealing in these securities.
Graded Surveillance Measures (GSM) –
1. Securities shall be shortlisted based on the pre-defined objective criteria.
2. List shall be periodically reviewed & published by the exchanges in a coordinated manner.
3. Identification / review of securities for Graded surveillance measures shall be carried out twice a year.
4. In addition to existing Surveillance action being imposed from time to time, it may be noted that these securities shall be monitored for the price movement and based on the pre-determined objective criteria shall attract following additional graded surveillance measures:
| Stage | Surveillance Actions |
| I | Transfer to trade for trade with price band of 5% or lower as applicable |
| II | Trade for trade with price band of 5% or lower as applicable and Additional Surveillance Deposit (ASD) of 100% of trade value to be collected from Buyer |
| III | Trading permitted once a week trading and ASD 100% of trade value to be deposited by the buyers (Every Monday) |
| IV | Trading permitted once a week trading with ASD 200% of trade value to be deposited by the buyers (Every Monday) |
| V | Trading permitted once a month trading with ASD 200% of trade value to be deposited by the buyers (First Monday of the month) |
| VI | Trading permitted once a month with no upward movement in price of the security with ASD 200% of trade value to be deposited by the buyers (First Monday of the month) |
Notes:-
a) The list of securities moving from higher stage of Graded Surveillance Measures shall be informed to the market, vide notice time to time.
b) Additional Surveillance Deposit (ASD) collected w.r.t. securities part of GSM Framework shall be retained at least a period of 3 months and will be released as per the given: (Circular: BSE-20180112-17 / NSE-SURV-36741)./ MSE-SURV-5940-2018)
c) This ASD shall not be refunded or adjusted even if securities purchased is sold off at the later stage within a 3 Months and also shall not be considered for giving further exposure.
d) ASD shall be over and above existing margins or deposits levied by the Exchanges on transactions in such companies and shall be interest free.
e) In case of default in payment of ASD, penal actions may be initiated against the trading member.
f) In case the scheduled trading day is falling on a trading holiday, the trading shall be permitted on the next trading day.
BSE FAQ’s on Graded Surveillance Measures (GSM) & NSE FAQ’s on Graded Surveillance Measures (GSM).
Please refer below link for the list of securities under Graded Surveillance Measures (GSM).
Periodic Call Auction Illiquid Scrips (PCAS)
This is with reference to circular CIR/MRD/DP/6/2013 dated February 14, 2013 & CIR/MRD/DP/38/2013 dated December 19, 2013 issued by SEBI on periodic call auction process for trading in illiquid securities in the exchange platform.
The main features of the new periodic call auction process are:
Trading in illiquid scrips in the equity market shall be conducted only through periodic call auction sessions.
• Criteria for illiquidity – For the purpose of this circular, a scrip which trades in the normal market and is not shifted to trade for trade settlement, shall be classified as illiquid on a stock exchange if all the following conditions are met:
- Average daily turnover of less than Rs. 2 lakhs calculated for previous two quarters and
- The scrip is classified as illiquid at all exchanges where it is traded.
- Scrips with average market capitalization more than Rs. 10Cr.
- Scrips where company is paying dividend in at least two out of last three years.
- Scrips where company is profitable in at least 2 out of last 3 years, and not more than 20% of promoters shareholding is pledged in the latest quarter and book value is 3 times or more than the face value.
• Exit from periodic call auction mechanism Stock exchanges shall move scrips from periodic call auction mechanism to normal trading session if the following criteria are met:
(2.4.1.) The srip has remained in periodic call auction for at least one quarter
(2.4.2.) It is not classified as illiquid as per Criteria for Illiquidity.
Number of auction sessions - Stock Exchange may determine the number of call auction session for illiquid stocks. However in order have minimum trading sessions and uniform closing session, there shall be at least 2 sessions in a trading day with one uniform closing session across the exchanges.
Session duration - The call auction session duration shall be one hour, of which 45 minutes shall be allowed for order entry, order modification and order cancellation, 8 minutes shall be for order matching and trade confirmation and remaining 7 minutes shall be a buffer period for closing the current session and facilitating the transition to next session. The session shall close randomly during last one minute of order entry between the 44th & 45th minute. Such random closure shall be system driven.
Order Placement - The orders may remain valid throughout the trading day and un-matched orders remaining at the end of a call auction session may be moved into next call auction session.
Un-matched orders - All un-matched orders remaining at the end of a call auction session shall be purge.
Price band - A maximum price band of 20% shall be applicable on the scrips through the day. Exchanges may reduce the price bands uniformly based on surveillance related concerns.
If the Market wide Index Circuit Breaker gets triggered at any time during the periodic call auction session, the session shall be cancelled and all orders shall be purged. The periodic call auction session shall be resumed at the nearest half hour after the normal market resumes.
Penalty for certain trades - In the event where maximum of buy price entered by a client (on PAN basis) is equal to or higher than the minimum sell price entered by that client and if the same results into trades, a penalty shall be imposed on such trades. The penalty shall be calculated and charged by the exchange and collected from trading members on a daily basis. Trading members may recover such penalty from clients. The penalty so collected shall be deposited to Investor Protection Fund. Penalty for each such instance per session will be higher of the following:
0.50% of the trade value for sale and 0.50% of trade value for the buy, resulting in 1% penalty for the client on PAN basis.
OR
2500/- for the buy trade and 2500/- for the sell trade, resulting in penalty of 5000/- for the client on PAN Basis.
Please CLICK HERE for List of Securities currently marked as Illiquid & in Graded Surveillance Measures by NSE, BSE and MSEI & Scrips blocked by Internal Surveillance along with the circulars issued by SEBI, NSE, BSE and MSEI. The list of illiquid securities & GSM list of securities is subject to change as when the exchanges intimates based on the criteria specified.
In case of any violation, penalty would be levied by the exchanges and the same would be debited to the respective client's ledger.
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Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please refer the Risk Disclosure Document issued by SEBI and go through the Rights and Obligations and Do's and Dont's issued by Stock Exchanges and Depositories before trading on the Stock Exchanges. For commodities derivatives, please note that Commodities Derivatives are highly leveraged instruments.
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