Description

BSE updates Enhanced Surveillance Measure (ESM) framework with 5 new securities added, 1 security moved to higher stage, and 29 securities moved to lower stage ESM, effective October 13, 2025.

Summary

BSE has updated the Enhanced Surveillance Measure (ESM) framework effective October 13, 2025. The circular identifies securities being added to ESM, securities moving to higher ESM stages, and securities being downgraded to lower ESM stages. The ESM framework is designed to alert investors about securities exhibiting abnormal price movements or compliance issues.

Key Points

  • 5 securities newly added to ESM framework: Escorp Asset Management, Mahamaya Steel Industries, Sabrimala Industries India, Tradewell Holdings, and Visa Steel
  • 1 security moving to higher ESM stage: Virat Industries Ltd
  • 29 securities moving to lower ESM stages, indicating improved market behavior
  • 15 securities moving out of ESM framework entirely (Annexure II)
  • Changes effective from October 13, 2025
  • Securities marked with asterisk (*) align with NSE classifications
  • Securities marked with hash (#) are SME scrips

Regulatory Changes

The ESM framework applies progressive surveillance stages with increasing restrictions:

  • Stage 1: Additional surveillance deposit (ASD) requirement, reduced price band
  • Stage 2: Higher ASD, further restricted price bands, 100% margin requirements
  • Higher Stages: Increasingly stringent trading restrictions

Securities in ESM are subject to:

  • Restricted price bands (typically 5% or lower)
  • Additional disclosure requirements
  • Enhanced margin obligations
  • Trade-for-trade settlement on rolling basis
  • No derivatives trading permitted

Compliance Requirements

For Listed Companies:

  • Companies must address underlying issues causing ESM classification
  • Enhanced disclosure obligations regarding corporate actions
  • Timely submission of financial results and compliance documents

For Trading Members:

  • Collect additional margins as specified for ESM securities
  • Ensure client awareness about ESM status and associated restrictions
  • Monitor positions in ESM securities closely

For Investors:

  • Exercise caution when trading ESM securities
  • Be aware of reduced liquidity and restricted price movements
  • Understand higher margin requirements
  • Consider ESM status as risk indicator

Important Dates

  • Effective Date: October 13, 2025 - All ESM changes become applicable
  • Circular Date: October 10, 2025 - Announcement date providing 3 days notice

Impact Assessment

Market Impact:

  • Trading volumes in newly added ESM securities likely to decline due to enhanced restrictions
  • Reduced liquidity in affected securities may lead to wider bid-ask spreads
  • Investors may face difficulty exiting positions in ESM securities
  • Positive signal for 29 securities moving to lower ESM stages, indicating improved compliance

Investor Impact:

  • Higher capital requirements for trading ESM securities due to increased margins
  • Limited intraday trading opportunities due to trade-for-trade settlement
  • Enhanced risk awareness required before investing in ESM securities
  • 15 securities exiting ESM framework provides relief to existing investors

Operational Impact:

  • Brokers must update risk management systems to reflect new ESM classifications
  • Enhanced monitoring required for margin collection on ESM securities
  • Client communication necessary to inform about changed surveillance status

Securities-Specific Impact:

  • Virat Industries: Moving to higher ESM stage indicates continued concerns
  • 5 New Additions: Face strictest surveillance measures, significant trading restrictions
  • 29 Downgraded Securities: Gradually relaxed restrictions as compliance improves
  • 15 Exits: Complete removal of ESM restrictions, normalized trading conditions

Impact Justification

High impact as ESM framework significantly affects trading conditions including price bands, circuit filters, and margin requirements for 35 securities. New additions face strictest surveillance while downgrades indicate improved compliance.