Graded Surveillance Measure (GSM) - Securities Moving to Higher GSM Stages

Description

BSE has moved 8 securities to higher stages of the Graded Surveillance Measure framework, with companies progressing to GSM Stages I through IV based on surveillance criteria.

Summary

BSE has announced the movement of 8 securities into higher stages of the Graded Surveillance Measure (GSM) framework. The GSM is a surveillance mechanism designed to alert investors about securities that have exhibited abnormal price movements or other risk factors. Four securities are moving to GSM Stage I, one to Stage II, two to Stage III, and one to Stage IV, with each stage imposing progressively stricter trading conditions.

Key Points

• 8 securities are being moved to higher GSM stages effective from the date of the circular
• Octaware Technologies Ltd, SGN Telecoms Ltd, Vani Commercials Ltd, and Mac Hotels Ltd are moving to GSM Stage I
• Harig Crankshafts Ltd is moving to GSM Stage II
• Shree Manufacturing Company Ltd and Eurotex Industries and Exports Ltd are moving to GSM Stage III
• Revati Media Ltd is moving to GSM Stage IV (highest surveillance stage)
• Securities can move to lower GSM stages if included in ESM (Enhanced Surveillance Measure) or IBC (Insolvency and Bankruptcy Code) frameworks

Regulatory Changes

No new regulatory framework changes. This circular implements the existing GSM framework which applies progressively stricter surveillance measures as securities move through stages I to IV, including:

• Increased margin requirements at each stage
• Trade-for-trade settlement with no intraday trading
• Price bands and circuit filters
• Periodic call auctions in higher stages
• Additional disclosures and monitoring

Compliance Requirements

• Trading members must ensure compliance with applicable margin requirements for these securities
• Investors should be aware of enhanced surveillance status and associated trading restrictions
• Brokers must inform clients about the GSM status of these securities
• Only delivery-based trading is permitted (no intraday trading)
• Clients must have sufficient funds/securities before placing orders

Important Dates

• Effective Date: November 4, 2025 (date of circular issuance)

Impact Assessment

High Impact: Movement to higher GSM stages significantly affects trading liquidity and investor participation. The enhanced surveillance measures include:

• Liquidity Impact: Trade-for-trade settlement and higher margins typically reduce trading volumes and liquidity
• Cost Impact: Investors face higher margin requirements (100% upfront in most GSM stages)
• Trading Restrictions: No intraday trading allowed; only delivery-based transactions permitted
• Investor Sentiment: GSM classification signals heightened risk, potentially deterring retail investors
• Price Volatility: While aimed at curbing excessive volatility, GSM can sometimes lead to sharp price movements due to reduced liquidity

Affected Securities:

Investors holding these securities should review their positions carefully and understand the implications of enhanced surveillance measures on their trading strategies.

Impact Justification

Movement to higher GSM stages significantly impacts trading as it involves additional surveillance measures, stricter margin requirements, and trading restrictions that directly affect investors and market participants.