Enhanced Surveillance Measure (ESM) - Securities Inclusion, Stage Movement and Exit (May 2026)

Description

BSE updates the Enhanced Surveillance Measure (ESM) framework with new securities attracting 100% margin from May 13, 2026, stage movements, and exits from the framework effective May 12, 2026.

Summary

BSE has updated the Enhanced Surveillance Measure (ESM) framework effective May 12–13, 2026. Securities newly included under ESM (Annexure I) will attract a minimum 100% margin on all open and new positions from May 13, 2026, and will be shifted from the Rolling Settlement segment to the Trade-for-Trade segment. Securities moving out of the framework are listed in Annexure II, and a consolidated list of all securities under ESM is provided in Annexure III.

Key Points

• Securities in Annexure I are newly included under ESM and will attract minimum 100% margin effective May 13, 2026, on all open positions as on May 12, 2026, and new positions from May 13, 2026.
• Certain securities will be moved to a lower Stage (Stage I) under the ESM Framework effective May 12, 2026.
• Securities qualifying under ESM will be shifted from Rolling Settlement to Trade-for-Trade segment effective May 13, 2026.
• Securities moving to Stage II will be placed under Trade-for-Trade with a 2% price band and Periodic Call Auction effective May 12, 2026.
• Securities listed in Annexure II are exiting the ESM framework effective May 12, 2026; their price bands will be reinstated to pre-ESM levels (unless subject to another surveillance measure).
• ESM operates in conjunction with all other prevailing surveillance measures imposed by exchanges.
• Shortlisting under ESM is solely for market surveillance purposes and should not be construed as adverse action against the concerned company or entity.

Regulatory Changes

This notice updates the ESM framework in continuation of earlier notices: 20230602-44, 20230718-46, 20240809-42, 20240920-63, 20241004-65, and 20250725-61. Securities are periodically reviewed for inclusion, stage movement, and exit from the framework based on surveillance criteria.

Compliance Requirements

• Trading members must ensure minimum 100% margin is collected on ESM-included securities from May 13, 2026.
• Members must adhere to Trade-for-Trade settlement for ESM-included securities; no netting of positions is permitted.
• For Stage II securities, trading must comply with the 2% price band and Periodic Call Auction mechanism.
• Members should refer to the attached Annexures (I, II, III) to identify affected securities and update their risk and margin systems accordingly.
• For clarifications, members may contact bse.surv@bseindia.com.

Important Dates

Impact Assessment

This circular has a high market impact for affected securities. The imposition of 100% margin significantly increases the cost of holding or building positions, likely reducing liquidity and trading volumes in the affected scrips. The mandatory shift to Trade-for-Trade settlement eliminates intraday netting, further constraining trading activity. Stage II securities face additional restrictions with a tight 2% price band and Periodic Call Auction, which can lead to reduced price discovery efficiency. Securities exiting the framework will see relief as normal price bands and settlement mechanisms are restored. Market participants, especially retail investors and proprietary traders, should review the Annexures carefully and adjust margin provisioning and trading strategies accordingly.

Impact Justification

Imposes 100% margin requirement on newly included ESM securities, mandates shift from Rolling Settlement to Trade-for-Trade segment, and applies restrictive 2% price band with Periodic Call Auction for Stage II securities — significant trading restrictions affecting multiple listed equities.