Description
BSE notifies trading members that certain securities will be moved to higher GSM stages effective May 13, 2026, attracting enhanced surveillance actions including trade-for-trade settlement, additional margins, and restricted trading frequency.
Summary
BSE has issued Notice No. 20260512-33 informing trading members that specified securities (listed in the attached Annexure) will be moved to higher stages of the Graded Surveillance Measure (GSM) framework with effect from May 13, 2026. The GSM framework, established in February 2017 and subsequently updated, imposes progressively stringent surveillance actions on securities at higher stages to protect investors from excessive speculation in illiquid or fundamentally weak stocks.
Key Points
- Securities listed in the Annexure (Annexure_GSM) will be escalated to higher GSM stages effective May 13, 2026
- GSM covers four stages (I through IV), each with progressively stricter surveillance actions
- No netting off is allowed; all settlements will be done on a trade-to-trade basis
- Trading members are advised to take adequate precautions while trading in affected securities
- Members may refer to BSE’s FAQ on GSM or contact bse.surv@bseindia.com for clarifications
Regulatory Changes
The GSM framework surveillance actions by stage are as follows:
| Stage | Surveillance Actions |
|---|---|
| I | Applicable margin rate shall be 100%; price band of 5% or lower as applicable |
| II | Trade-for-trade with price band of 5% or lower; Additional Surveillance Deposit (ASD) of 50% of trade value to be deposited by buyers |
| III | Trade-for-trade with price band of 5% or lower; trading permitted once a week (every Monday/1st trading day); ASD of 100% of trade value to be deposited by buyers |
| IV | Trade-for-trade with price band of 5% or lower; trading permitted once a week (every Monday/1st trading day); ASD of 100% of trade value to be deposited by buyers; no upward price movement permitted |
This notice references the following prior exchange notices establishing the GSM framework:
- Notice No. 20170223-44 (February 23, 2017)
- Notice No. 20170303-29 (March 03, 2017)
- Notice No. 20180720-55 (July 20, 2018)
- Notice No. 20191129-23 (November 29, 2019)
- Notice No. 20231117-63 (November 17, 2023)
Compliance Requirements
- Trading Members: Must ensure compliance with the applicable surveillance actions for each GSM-stage security as per the framework
- Buyers: Must deposit the required Additional Surveillance Deposit (ASD) — 50% of trade value at Stage II, and 100% of trade value at Stages III and IV
- Settlement: No netting off is permitted; all trades in GSM securities must be settled on a trade-to-trade basis
- Trading Frequency: For Stage III and IV securities, trading is restricted to once a week (every Monday or the first trading day of the week)
- Members should refer to the GSM FAQ at: http://www.bseindia.com/markets/equity/EQReports/graded_surveil_measure.aspx?expandable=6
Important Dates
- Notice Date: May 12, 2026
- Effective Date: May 13, 2026 — securities moved to their respective higher GSM stages
Impact Assessment
The escalation of securities to higher GSM stages has significant market impact:
- Liquidity Reduction: Trade-for-trade settlement and weekly trading restrictions (Stages III & IV) severely reduce liquidity in affected securities
- Capital Requirements: Buyers face substantially higher capital requirements due to ASD of 50%–100% of trade value, discouraging speculative activity
- Price Discovery: The 5% price band limits daily price movement, constraining price discovery; Stage IV additionally prohibits upward price movement entirely
- Investor Caution: The heightened scrutiny signals BSE’s concern over the fundamentals or trading patterns of these securities, serving as a warning to investors
- Broker Operations: Trading members must update their systems and alert clients about restrictions to ensure compliance and avoid penalties
- The specific securities affected are listed in the attached Annexure and should be reviewed by members for portfolio management decisions
Impact Justification
GSM stage escalation directly restricts trading in affected securities through mandatory trade-for-trade settlement, higher margins (up to 100%), additional surveillance deposits (up to 100% of trade value), and weekly trading restrictions — materially impacting liquidity and investor participation in these stocks.