Description
BSE announces inclusion of new securities under Enhanced Surveillance Measure (ESM) with 100% margin requirement effective May 14, 2026, along with stage movements and exits from the ESM framework.
Summary
BSE has issued a notice updating the Enhanced Surveillance Measure (ESM) framework, announcing new securities meeting ESM inclusion criteria, stage movements (to Stage I), and securities exiting the framework. Affected securities will attract a minimum 100% margin and shift from Rolling Settlement to Trade-for-Trade settlement effective May 14, 2026. Stage II securities will additionally face a 2% price band and Periodic Call Auction mechanism.
Key Points
- New securities in Annexure I have met ESM inclusion criteria and will attract minimum 100% margin on all open positions as of May 13, 2026 and new positions from May 14, 2026
- Certain securities currently in ESM will be downgraded to Stage I of the ESM Framework effective May 13, 2026
- All ESM-qualifying securities will shift from Rolling Settlement to Trade-for-Trade (T2T) segment effective May 14, 2026
- Stage II securities will be subject to Trade-for-Trade with a 2% price band and Periodic Call Auction effective May 13, 2026
- Securities exiting the ESM framework as of May 13, 2026 are listed in Annexure II
- A consolidated list of all securities under ESM is provided in Annexure III
- ESM operates alongside all other prevailing surveillance measures imposed by exchanges
- Shortlisting under ESM is purely for market surveillance and should not be construed as adverse action against the company
Regulatory Changes
This notice updates the ESM framework originally established under notice no. 20230602-44 (June 2, 2023) and subsequently amended by notices dated July 18, 2023, August 9, 2024, September 20, 2024, October 4, 2024, and July 25, 2025. The current update reflects the periodic review cycle of the ESM list, with additions, stage changes, and removals taking effect from May 13–14, 2026.
Compliance Requirements
- Trading Members: Must comply with 100% margin requirement on open positions in ESM-listed securities from May 13, 2026; no margin offset against other positions
- Clearing Members: Must ensure adequate margins are collected from clients for T2T and ESM securities
- Market Participants: Must note that ESM securities are restricted to Trade-for-Trade settlement — intraday netting is not permitted
- For Stage II securities: Trades must conform to 2% price band limits and Periodic Call Auction trading mechanism
- For clarifications, members may contact BSE Surveillance at bse.surv@bseindia.com
Important Dates
| Date | Event |
|---|---|
| May 12, 2026 | Notice issued |
| May 13, 2026 | Stage I downgrade effective; securities exit ESM framework; Stage II price band/PCA effective |
| May 14, 2026 | 100% margin requirement effective on new and existing open positions; shift to Trade-for-Trade segment effective |
Impact Assessment
This circular has a high market impact for securities listed in the annexures. Key consequences include:
- Liquidity reduction: Shift to Trade-for-Trade eliminates intraday netting, reducing speculative trading activity and overall liquidity
- Increased capital requirements: 100% margin requirement significantly raises the cost of holding positions, potentially triggering forced unwinding by leveraged participants
- Price discovery constraints: Stage II securities face a restrictive 2% daily price band under Periodic Call Auction, severely limiting price movement
- Investor caution signal: ESM inclusion, while framed as surveillance-only, typically signals elevated risk and can lead to reduced institutional interest
- Positive exits: Securities moving out of ESM (Annexure II) will have price bands reinstated to pre-ESM levels, improving trading conditions unless subject to other surveillance frameworks
Impact Justification
ESM inclusion mandates 100% margin and shifts securities to Trade-for-Trade settlement, significantly restricting trading conditions and liquidity for affected securities across multiple companies.