Description
BSE notifies trading members that certain securities will be moved to higher GSM stages effective May 14, 2026, attracting enhanced surveillance actions including trade-to-trade settlement, margin requirements, and Additional Surveillance Deposits.
Summary
BSE has notified trading members that certain securities (listed in the attached Annexure) will be moved to higher stages of the Graded Surveillance Measure (GSM) framework effective May 14, 2026. The GSM framework, originally published on February 23, 2017, applies progressively stricter surveillance actions at each stage to securities exhibiting abnormal price-volume behaviour. Affected securities will attract enhanced restrictions ranging from increased margin requirements to weekly trading limits and mandatory Additional Surveillance Deposits (ASD).
Key Points
- Securities as per the attached Annexure will move to higher GSM stages effective May 14, 2026
- No netting off is permitted; settlement will be on a trade-to-trade basis for all affected securities
- Trading members are advised to take adequate precautions while trading in these securities
- Four GSM stages exist, each with progressively stricter surveillance actions
- Signed by Sanjay Jain (Deputy Vice President, Surveillance) and Arpita Joshi (Manager, Surveillance)
Regulatory Changes
The GSM framework defines four stages of surveillance actions:
| Stage | Surveillance Actions |
|---|---|
| Stage I | 100% applicable margin rate AND price band of 5% or lower |
| Stage II | Trade-to-trade with 5% price band or lower AND Additional Surveillance Deposit (ASD) of 50% of trade value to be deposited by buyers |
| Stage III | Trade-to-trade with 5% price band or lower AND trading permitted once a week (every Monday / 1st trading day) AND ASD of 100% of trade value by buyers |
| Stage IV | Trade-to-trade with 5% price band or lower AND trading permitted once a week (every Monday / 1st trading day) AND ASD of 100% of trade value by buyers with no upward price movement |
This notice references the following prior exchange notices establishing the GSM framework:
- Notice 20170223-44 (February 23, 2017)
- Notice 20170303-29 (March 03, 2017)
- Notice 20180720-55 (July 20, 2018)
- Notice 20191129-23 (November 29, 2019)
- Notice 20231117-63 (November 17, 2023)
Compliance Requirements
- Trading members must note the list of securities in the Annexure and apply the relevant GSM-stage restrictions from May 14, 2026
- Buyers in Stage II securities must deposit ASD of 50% of trade value
- Buyers in Stage III and IV securities must deposit ASD of 100% of trade value
- No netting off is permitted; all trades in affected securities settle on a gross trade-to-trade basis
- Trading in Stage III and IV securities is restricted to once a week (Monday or first trading day of the week)
- Members should consult the GSM FAQ at: http://www.bseindia.com/markets/equity/EQReports/graded_surveil_measure.aspx?expandable=6
- Queries may be directed to bse.surv@bseindia.com
Important Dates
- Notice Date: May 13, 2026
- Effective Date: May 14, 2026 — securities move to their respective higher GSM stages
- Weekly trading window (Stage III & IV): Every Monday or first trading day of the week
Impact Assessment
This circular has a high impact on affected securities and their investors:
- Liquidity Risk: Securities in Stage III and IV can only be traded once per week, severely limiting exit opportunities for investors
- Cost of Trading: Mandatory ASD requirements (50%–100% of trade value) substantially increase the capital needed to buy affected securities, depressing demand
- Price Discovery: A 5% or lower price band combined with no-upward-movement restrictions (Stage IV) effectively caps price appreciation, signalling extreme regulatory concern
- Settlement Risk: Trade-to-trade settlement eliminates intraday netting, increasing settlement obligations and operational burden for brokers
- Investor Caution: The GSM designation is a regulatory signal of potential price manipulation or abnormal trading patterns; retail and institutional investors should exercise heightened due diligence before trading in Annexure-listed securities
Impact Justification
GSM stage upgrades impose significant trading restrictions including trade-to-trade settlement, 100% margin requirements, weekly trading limits, and mandatory Additional Surveillance Deposits of up to 100% of trade value, materially impacting liquidity and trading activity in affected securities.