Description

BSE announces securities being moved to higher Graded Surveillance Measure (GSM) stages effective May 15, 2026, attracting enhanced margin requirements, trade-to-trade settlement, and Additional Surveillance Deposits.

Summary

BSE has announced that a list of securities (detailed in the attached Annexure) will be moved to higher stages of the Graded Surveillance Measure (GSM) framework effective May 15, 2026. The affected securities will attract progressively stringent surveillance actions depending on their assigned GSM stage (I through IV), including enhanced margin requirements, trade-to-trade settlement, price band restrictions, and Additional Surveillance Deposits (ASD).

Key Points

  • Securities in the Annexure will be moved to higher GSM stages effective May 15, 2026
  • GSM framework covers four stages with escalating surveillance restrictions
  • Stage I: 100% applicable margin rate with price band of 5% or lower
  • Stage II: Trade-to-trade settlement, 5% price band, and ASD of 50% of trade value (paid by buyers)
  • Stage III: Trade-to-trade settlement, 5% price band, trading only once a week (every Monday/1st trading day), and ASD of 100% of trade value (paid by buyers)
  • Stage IV: Same as Stage III with an additional restriction of no upward price movement
  • No netting off is permitted; all settlements are on trade-to-trade basis
  • Trading members are urged to take adequate precautions while trading in these securities

Regulatory Changes

The notice is issued with reference to multiple prior Exchange circulars establishing and updating the GSM framework:

  • Exchange notice no. 20170223-44 dated February 23, 2017 (original GSM framework)
  • Exchange notice no. 20170303-29 dated March 03, 2017
  • Exchange notice no. 20180720-55 dated July 20, 2018
  • Exchange notice no. 20191129-23 dated November 29, 2019
  • Exchange notice no. 20231117-63 dated November 17, 2023

The current notice moves specified securities to higher GSM stages under the existing framework, with no changes to the framework itself.

Compliance Requirements

  • Trading Members: Must note the GSM stage changes for all securities listed in the Annexure and apply the corresponding surveillance actions from May 15, 2026
  • Buyers: Must deposit Additional Surveillance Deposits (ASD) as applicable — 50% of trade value at Stage II, and 100% of trade value at Stages III and IV
  • Settlement: All trades in GSM-listed securities must be settled on a trade-to-trade basis with no netting off allowed
  • Members should review the GSM FAQ and contact bse.surv@bseindia.com for clarifications

Important Dates

  • May 14, 2026: Notice issued
  • May 15, 2026: Effective date for securities moving into their respective higher GSM stages

Impact Assessment

The movement of securities into higher GSM stages significantly reduces liquidity and increases the cost of trading in affected stocks. Stage III and IV restrictions — permitting trading only once a week and requiring 100% ASD — effectively make these securities highly illiquid and expensive to trade. Investors holding such securities may find it difficult to exit positions, while new buyers face substantially higher capital requirements. The mandatory trade-to-trade settlement eliminates the ability to offset buy and sell positions, further increasing margin and capital requirements for market participants. The specific securities affected are listed in the Annexure attached to the original notice.

Impact Justification

GSM stage movements significantly restrict trading in affected securities through mandatory trade-to-trade settlement, enhanced margins up to 100%, weekly trading restrictions, and Additional Surveillance Deposits up to 100% of trade value, materially impacting liquidity and trading costs.