Description

BSE announces updates to the Enhanced Surveillance Measure (ESM) framework with 7 securities being newly shortlisted, 3 securities moving to higher ESM stages, and consolidated list of securities under surveillance.

Summary

BSE has issued an update to the Enhanced Surveillance Measure (ESM) Framework effective October 21, 2025. The circular includes three key annexures: Annexure I lists 7 securities newly shortlisted for ESM and 3 securities moving to higher ESM stages; Annexure II covers securities moving out of ESM (currently NIL); and Annexure III provides a consolidated list of all securities currently under ESM framework with their respective stages. The ESM framework is a surveillance mechanism to monitor securities showing abnormal price movements or other concerning trading patterns.

Key Points

  • 7 new securities added to ESM framework: Earkart Ltd, Gujarat Raffia Industries Ltd, Hybrid Financial Services Ltd, Modern Malleables Ltd, Nilachal Carbo Metalicks Ltd, Tarapur Transformers Ltd, and Venmax Drugs and Pharmaceuticals Ltd
  • 3 securities moving to higher ESM stages: GDL Leasing & Finance Ltd, Prima Industries Ltd, and VR Woodart Ltd
  • No securities moving to lower ESM stages or exiting ESM framework in this update
  • Consolidated list includes at least 24 securities across various ESM stages (Stage I and Stage II)
  • Some securities marked as SME scrips (indicated by #) and some aligned with NSE classifications (indicated by *)
  • Changes effective from October 21, 2025

Regulatory Changes

The ESM framework continues to operate as a graded surveillance measure where securities are placed under increasing levels of monitoring based on market behavior. Securities can be moved between different ESM stages (higher or lower) based on their trading patterns and compliance with market norms. The framework includes provisions for securities to exit ESM under certain conditions, including movement to Security-wise Price Movement (SMP) Framework or Insolvency and Bankruptcy Code (IBC) Framework.

Compliance Requirements

  • Investors and traders must be aware that securities under ESM are subject to additional surveillance measures
  • Trading in ESM securities may have specific restrictions or requirements depending on the ESM stage
  • Market participants should exercise increased caution when dealing with securities listed under ESM framework
  • Enhanced disclosure and reporting requirements may apply to transactions in ESM securities
  • Brokers and intermediaries must ensure clients are informed about ESM status of securities

Important Dates

  • October 21, 2025: Effective date for all ESM framework changes announced in this circular
  • Securities will be moved to their respective new ESM stages or added to ESM framework from this date

Impact Assessment

Market Impact: The addition of 7 new securities to ESM and movement of 3 securities to higher stages indicates increased surveillance on these stocks. This typically results in reduced liquidity, wider bid-ask spreads, and potential selling pressure as some institutional investors may avoid or reduce exposure to ESM securities.

Investor Impact: Retail and institutional investors holding these securities should be aware of potential trading restrictions and increased volatility. Securities under ESM often face additional margin requirements and may be subject to trading restrictions such as trade-for-trade settlement or price bands.

Operational Impact: The consolidated list of 24+ securities under various ESM stages requires market participants to maintain updated surveillance lists and implement appropriate risk management measures. The graded nature of ESM means securities can move between stages, requiring ongoing monitoring by market participants.

Impact Justification

Affects trading of multiple securities with enhanced surveillance measures. Investors and traders in these stocks face additional restrictions and monitoring, impacting liquidity and trading activity.