Description
BSE announces movement of 8 securities into various stages of the Graded Surveillance Measure (GSM) framework, with companies moving into Stages I through IV.
Summary
BSE has announced the movement of 8 securities into various stages of the Graded Surveillance Measure (GSM) framework. Two securities are moving to Stage I, two to Stage II, two to Stage III, and two to Stage IV. The GSM framework is designed to alert investors about securities that have witnessed abnormal price rise which is not commensurate with financial health and fundamentals.
Key Points
- Vintage Securities Ltd and Mayur Floorings Ltd are moving to GSM Stage I
- Velan Hotels Ltd and Paos Industries Ltd are moving to GSM Stage II
- Ace Engitech Ltd and Digjam Ltd are moving to GSM Stage III
- Coromandel Engineering Company Ltd and Aar Shyam India Investment Company Ltd are moving to GSM Stage IV
- Securities may move to lower GSM stages if included in ESM (Enhanced Surveillance Measure) or IBC (Insolvency and Bankruptcy Code) frameworks
- Digjam Ltd classification is as per NSE
Regulatory Changes
Securities placed under GSM are subject to progressive surveillance measures with each stage imposing stricter trading conditions:
- Stage I: Price band restrictions and additional surveillance
- Stage II: Enhanced margin requirements and further restrictions
- Stage III: More stringent margin requirements and trading limitations
- Stage IV: Maximum surveillance measures including highest margins and circuit filters
The framework applies graded restrictions based on the stage, with higher stages indicating greater surveillance concerns.
Compliance Requirements
- Trading members must ensure compliance with applicable margin requirements for securities in respective GSM stages
- Investors should be aware of the enhanced risk associated with trading in GSM securities
- Brokers must inform clients about the GSM classification and associated restrictions
- All trades in GSM securities must follow the prescribed price bands and circuit limits
Important Dates
- Circular Date: October 15, 2025
- Effective Date: As per BSE notification (immediate applicability)
Impact Assessment
Market Impact: The inclusion of these 8 securities in various GSM stages will significantly impact their trading dynamics. Securities in higher GSM stages face severe liquidity constraints due to higher margin requirements and stricter circuit filters.
Investor Impact: Investors holding these securities will face:
- Reduced liquidity for entry and exit
- Higher margin requirements for trading
- Increased price volatility within permitted circuit limits
- Greater difficulty in executing large orders
Operational Impact: Trading members must update their systems to reflect the new GSM classifications and ensure proper margin collection. The progressive nature of GSM means continued poor fundamentals could lead to further stage escalation, potentially resulting in trade-to-trade settlement or additional restrictions.
Impact Justification
Movement into GSM stages indicates surveillance concerns and results in trading restrictions including higher margins and circuit filters, significantly impacting liquidity and investor participation in these securities.