Enhanced Surveillance Measure (ESM) - Securities Inclusion, Stage Changes and Exits effective May 2026

Description

BSE notifies inclusion of new securities under ESM attracting 100% margin from May 07, 2026, along with stage downgrades, Trade-for-Trade segment shifts, and securities exiting the ESM framework effective May 06-07, 2026.

Summary

BSE has updated the Enhanced Surveillance Measure (ESM) framework, effective May 06-07, 2026. New securities listed in Annexure I will attract a minimum 100% margin on all open and new positions from May 07, 2026. Certain securities are being moved to a lower stage (Stage I), while securities in Stage II will be subjected to Trade-for-Trade settlement with a 2% price band and Periodic Call Auction. Securities exiting the framework are listed in Annexure II.

Key Points

• Securities in Annexure I will attract minimum 100% margin on all open positions as on May 06, 2026 and new positions from May 07, 2026.
• Certain securities are being moved to a lower Stage (Stage I) under the ESM framework effective May 06, 2026.
• All ESM-qualifying securities will shift from Rolling Settlement to Trade-for-Trade segment w.e.f. May 07, 2026.
• Securities moving to Stage II will be under Trade-for-Trade with a 2% price band and Periodic Call Auction effective May 06, 2026.
• Securities exiting the ESM framework are listed in Annexure II, effective May 06, 2026.
• A consolidated list of all securities currently under ESM is provided in Annexure III.
• ESM framework operates in conjunction with all other prevailing surveillance measures on the exchanges.
• Shortlisting under ESM is purely a surveillance action and should not be construed as adverse action against the company.

Regulatory Changes

This notice updates the ESM framework in continuity with prior notices: 20230602-44, 20230718-46, 20240809-42, 20240920-63, 20241004-65, and 20250725-61. The changes enforce stricter trading conditions (100% margin, Trade-for-Trade, reduced price bands) for newly included securities and provide relief (stage downgrades, exits) for securities meeting exit criteria.

Compliance Requirements

• Trading Members must apply a minimum 100% margin on all open positions in newly included ESM securities as on May 06, 2026, and on all new positions created from May 07, 2026.
• Members must comply with Trade-for-Trade settlement restrictions for all ESM securities from May 07, 2026.
• For Stage II securities, members must adhere to the 2% price band and Periodic Call Auction mechanism effective May 06, 2026.
• For securities exiting the ESM framework, the price band will revert to the pre-ESM applicable band unless the security is under another surveillance measure, in which case the relevant framework’s price band will prevail.
• Members may contact BSE Surveillance at bse.surv@bseindia.com for clarifications.

Important Dates

Impact Assessment

The ESM update has significant market impact for affected securities. The mandatory 100% margin requirement substantially increases the cost of holding positions, likely reducing speculative interest and liquidity in newly included scrips. The mandatory shift to Trade-for-Trade settlement eliminates netting benefits and increases delivery obligations, further constraining short-term trading activity. Stage II securities face the most restrictive conditions — a 2% price band with Periodic Call Auction severely limits intraday price movement and trading frequency. Securities exiting the framework benefit from restored normal trading conditions, subject to no other active surveillance measures. Market participants should review the Annexures to identify impacted holdings and adjust margin and position management accordingly.

Impact Justification

Mandatory 100% margin requirement and compulsory shift to Trade-for-Trade segment directly restricts liquidity and trading conditions for affected securities; Stage II securities face a 2% price band with Periodic Call Auction, significantly limiting price discovery and tradability.