Description

BSE notifies inclusion of securities under Enhanced Surveillance Measure (ESM) with 100% margin requirement effective May 15, 2026, along with movement of securities between ESM stages and removal from the framework effective May 14, 2026.

Summary

BSE has updated the Enhanced Surveillance Measure (ESM) framework, notifying the inclusion of new securities attracting a minimum 100% margin requirement effective May 15, 2026. Securities are also being moved between ESM stages and removed from the framework effective May 14, 2026. This circular references prior ESM notices dating back to June 2023.

Key Points

  • Securities listed in Annexure I will attract a minimum 100% margin on all open positions as of May 14, 2026 and new positions from May 15, 2026
  • Some securities in Annexure I will be moved to a lower stage (Stage I) under ESM Framework effective May 14, 2026
  • Securities qualifying under ESM will shift from Rolling Settlement to Trade-for-Trade segment effective May 15, 2026
  • Securities moving to Stage II will be under Trade-for-Trade with a 2% price band and Periodic Call Auction effective May 14, 2026
  • Securities exiting the ESM Framework are listed in Annexure II, effective May 14, 2026
  • A consolidated list of all securities under the ESM framework is provided in Annexure III
  • ESM framework operates in conjunction with all other prevailing surveillance measures
  • Shortlisting under ESM is purely for market surveillance and should not be construed as adverse action against the company

Regulatory Changes

  • New securities added to ESM framework with 100% margin requirement
  • Stage movements within ESM (downgrade to Stage I for select securities)
  • Stage II securities subject to Trade-for-Trade settlement, 2% price band, and Periodic Call Auction
  • Price band of securities exiting ESM reinstated to pre-ESM levels, unless covered by another surveillance measure

Compliance Requirements

  • Trading members must ensure 100% margin is collected on ESM-listed securities for all open and new positions from the effective dates
  • Members must adhere to Trade-for-Trade settlement obligations for ESM securities
  • For Stage II securities, trading must comply with 2% price band and Periodic Call Auction mechanism
  • Members may contact bse.surv@bseindia.com for clarifications

Important Dates

  • May 14, 2026: Effective date for Stage I downgrade, securities exiting ESM (Annexure II), and Stage II Trade-for-Trade with 2% price band and Periodic Call Auction
  • May 15, 2026: Effective date for 100% margin requirement on newly included securities and shift from Rolling Settlement to Trade-for-Trade segment

Impact Assessment

This circular has a high market impact as it imposes stringent trading restrictions on affected securities. The 100% margin requirement significantly increases the cost of holding positions, likely reducing liquidity in these stocks. The shift to Trade-for-Trade settlement eliminates netting benefits for traders. Stage II securities face additional constraints with a tight 2% price band and Periodic Call Auction, further limiting price discovery and trading activity. Market participants with existing positions in affected securities must arrange additional margin by May 14-15, 2026.

Impact Justification

Imposes 100% margin requirement and shifts securities to Trade-for-Trade settlement, significantly affecting trading conditions for listed securities under ESM framework.