Description
BSE updates the Enhanced Surveillance Measure (ESM) framework, moving select securities to 100% margin requirement and Trade-for-Trade segment from May 20-21, 2026, with some securities downgraded to Stage I or exiting the framework.
Summary
BSE has updated the Enhanced Surveillance Measure (ESM) framework under Notice No. 20260519-22 dated May 19, 2026. Securities listed in Annexure I will attract a minimum 100% margin requirement effective May 21, 2026, and will be shifted from Rolling Settlement to the Trade-for-Trade segment. Additionally, certain securities are being moved to a lower ESM stage (Stage I), while others are exiting the framework entirely as of May 20, 2026.
Key Points
- Securities in Annexure I will attract minimum 100% margin on all open positions as on May 20, 2026 and new positions from May 21, 2026
- Qualifying ESM securities will be shifted from Rolling Settlement to Trade-for-Trade segment w.e.f. May 21, 2026
- Securities moving to Stage II will trade under Trade-for-Trade with a 2% price band and Periodic Call Auction w.e.f. May 20, 2026
- Certain securities in Annexure I are being moved to a lower Stage (Stage I) w.e.f. May 20, 2026
- Securities exiting the ESM Framework are listed in Annexure II, effective May 20, 2026
- A consolidated list of all securities under the ESM framework is available in Annexure III
- ESM 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
This notice updates the ESM framework originally established under the following prior notices:
- Notice No. 20230602-44 (June 02, 2023)
- Notice No. 20230718-46 (July 18, 2023)
- Notice No. 20240809-42 (August 09, 2024)
- Notice No. 20240920-63 (September 20, 2024)
- Notice No. 20241004-65 (October 04, 2024)
- Notice No. 20250725-61 (July 25, 2025)
Key regulatory update: Securities satisfying ESM inclusion criteria are now subject to enhanced margin and settlement restrictions, with stage-based differentiation (Stage I vs Stage II) governing the severity of restrictions.
Compliance Requirements
- Trading Members: Must ensure 100% margin is collected on all open and new positions in ESM-listed securities from the effective dates
- Members must note the shift to Trade-for-Trade settlement and adjust settlement procedures accordingly
- Stage II security trading: Must comply with the 2% price band and Periodic Call Auction mechanism
- Members should refer to the attached annexures for the complete and updated list of ESM securities
- For clarifications, members may contact: bse.surv@bseindia.com
Important Dates
| Date | Event |
|---|---|
| May 19, 2026 | Notice issued |
| May 20, 2026 | Securities downgraded to Stage I take effect; Stage II price band (2%) and Periodic Call Auction apply; ESM exits take effect |
| May 21, 2026 | Minimum 100% margin requirement applies on open positions (as on May 20) and new positions; shift to Trade-for-Trade segment effective |
Impact Assessment
Market Impact (High): The imposition of 100% margin requirements significantly increases the cost of holding positions in affected securities, likely reducing liquidity and trading volumes. The shift to Trade-for-Trade eliminates netting benefits, increasing settlement obligations for traders.
Stage II Restrictions: The 2% price band severely limits intraday price movement, and Periodic Call Auction replaces continuous trading — both measures are designed to curb speculative activity but may also impair legitimate price discovery.
Exits from ESM: Securities moving out of the framework will have their original price bands reinstated, unless subject to another surveillance measure, which would restore normal trading conditions and potentially attract renewed investor interest.
Investor Caution: Securities under ESM are flagged purely for surveillance purposes. However, the trading restrictions imposed (higher margins, T-for-T, price bands) have real operational and liquidity implications for market participants holding or trading these securities.
Impact Justification
Affects multiple securities with significant trading restrictions including 100% margin requirement, shift to Trade-for-Trade settlement, and 2% price band for Stage II securities — directly impacts liquidity and trading strategy for affected stocks.