Graded Surveillance Measure (GSM) - Securities Moving to Stages I, II, and III

Description

BSE has moved 9 securities into different GSM stages for enhanced surveillance due to market concerns.

Summary

BSE has announced the movement of 9 securities into various stages of the Graded Surveillance Measure (GSM) framework. This includes 3 securities moving to GSM Stage I, 3 securities to GSM Stage II, and 3 securities to GSM Stage III. The GSM framework is designed to enhance market surveillance and protect investor interests by imposing additional restrictions on securities exhibiting unusual market behavior.

Key Points

• 9 securities are being moved into different GSM stages effective immediately
• 3 securities moved to GSM Stage I: Kapil Cotex Ltd, Phaarmasia Ltd, Shivansh Finserve Ltd
• 3 securities moved to GSM Stage II: Sungold Capital Ltd, Gopal Iron & Steels Company Gujarat Ltd, Soni Medicare Ltd
• 3 securities moved to GSM Stage III: Cresanto Global Ltd, Nagarjuna Agri Tech Ltd, Senthil Infotek Ltd
• Securities may move to lower GSM stages if included in ESM (Enhanced Surveillance Measure) or IBC (Insolvency and Bankruptcy Code) frameworks

Regulatory Changes

The GSM framework imposes progressive restrictions as securities move through stages:

• Stage I: Additional disclosure requirements and price bands
• Stage II: Stricter surveillance with reduced price bands and periodic call auctions
• Stage III: More stringent restrictions including 100% upfront margin requirements and trade-for-trade settlement

Higher GSM stages indicate increased regulatory concern and require enhanced monitoring.

Compliance Requirements

• Trading members must ensure compliance with GSM-specific margin and settlement requirements for affected securities
• Investors trading in GSM securities must provide 100% upfront margins as applicable to the respective stage
• Market participants should be aware that securities in higher GSM stages have restricted liquidity and higher trading costs
• Brokers must inform clients about the implications of trading in GSM securities

Important Dates

• Effective Date: November 26, 2025 (as per circular date)

Impact Assessment

Market Impact: High impact on the 9 affected securities with significantly reduced liquidity and trading flexibility. Securities in Stage III face the most severe restrictions with trade-for-trade settlement and 100% margin requirements, which typically leads to reduced trading volumes.

Investor Impact: Existing shareholders may face difficulty exiting positions due to reduced liquidity. New investors face higher entry barriers due to margin requirements and trading restrictions.

Operational Impact: Trading members must update systems to enforce appropriate margins and settlement procedures for these securities.

Affected Securities Details

GSM Stage I

GSM Stage II

GSM Stage III

Impact Justification

Movement to GSM stages indicates regulatory concerns and imposes trading restrictions that significantly impact affected securities, though limited to 9 companies