Description

BSE updates the Enhanced Surveillance Measure (ESM) framework, adding securities requiring 100% margin from May 5, 2026, moving securities between stages, and listing exits from the framework effective May 4-5, 2026.

Summary

BSE has updated the Enhanced Surveillance Measure (ESM) framework, identifying securities for inclusion under ESM with mandatory 100% margin requirements effective May 5, 2026. Additional changes include downgrade of certain securities to Stage I, mandatory Trade-for-Trade settlement shifts, and removal of securities that qualify to exit the ESM framework, all effective May 4-5, 2026.

Key Points

  • Securities listed in Annexure I will attract a minimum 100% margin on all open positions as on May 4, 2026 and on new positions from May 5, 2026
  • Certain securities in Annexure I will be moved to a lower stage (Stage I) under the ESM framework effective May 4, 2026
  • All ESM-qualifying securities will shift from Rolling Settlement to Trade-for-Trade segment effective May 5, 2026
  • Securities moving to Stage II will be subject to Trade-for-Trade with a 2% price band and Periodic Call Auction effective May 4, 2026
  • Securities exiting the ESM framework are listed in Annexure II, effective May 4, 2026
  • A consolidated list of all securities under the ESM framework is available in Annexure III
  • ESM classification is purely for market surveillance and does not constitute adverse action against any company
  • Price bands for exiting securities revert to pre-ESM levels, unless covered by another surveillance measure

Regulatory Changes

This circular updates the ESM framework in continuation of prior notices dated June 2, 2023; July 18, 2023; August 9, 2024; September 20, 2024; October 4, 2024; and July 25, 2025. The update introduces fresh inclusions, inter-stage movements (to Stage I), and exits from the ESM framework as part of the periodic review cycle.

Compliance Requirements

  • Trading members must ensure collection of minimum 100% margin on positions in newly included ESM securities from May 5, 2026
  • Members must adhere to Trade-for-Trade settlement rules for all ESM securities from May 5, 2026
  • For Stage II securities, members must comply with the 2% price band and Periodic Call Auction mechanism from May 4, 2026
  • Members should refer to Annexures I, II, and III for the complete and updated list of affected securities
  • For clarifications, members may contact bse.surv@bseindia.com

Important Dates

  • May 4, 2026: Stage I downgrade effective; Stage II price band (2%) and Periodic Call Auction effective; ESM exits effective (Annexure II)
  • May 5, 2026: 100% margin requirement effective on open positions as on May 4, 2026 and new positions; shift from Rolling Settlement to Trade-for-Trade effective for newly included securities

Impact Assessment

The circular significantly impacts liquidity and trading flexibility for all securities included in or transitioning within the ESM framework. The 100% margin requirement substantially increases the cost of holding or creating positions, discouraging speculative activity. The shift to Trade-for-Trade eliminates netting benefits, further tightening liquidity. Stage II securities face additional constraints through the 2% price band and Periodic Call Auction, limiting intraday price movement. Securities exiting the framework benefit from restored price bands and normal settlement, improving tradability. Overall, this is a high-impact update for market participants with exposure to ESM-listed securities.

Impact Justification

Imposes 100% margin requirements and Trade-for-Trade restrictions on multiple securities, directly affecting liquidity and trading conditions for affected stocks. Stage changes and exits also alter trading parameters for a broad set of securities.