Description

NSE imposes minimum 35% margin on securities with high encumbrance levels; 3 securities added and 6 removed from the surveillance framework.

Summary

NSE has announced changes to its surveillance framework for companies with high encumbrance levels as per Regulation 28(3) of SEBI (SAST) Regulations 2011. Three securities (INDOTECH, AAVAS, and STEELXIND) will be included in the framework requiring minimum 35% margin from September 5, 2025, while six securities (GENUSPOWER, MSPL, DPSCLTD, NRBBEARING, SHAREINDIA, and NUVAMA) will be removed from the framework effective September 3, 2025.

Key Points

  • 3 securities added to high encumbrance surveillance measure: INDOTECH, AAVAS, and STEELXIND
  • 6 securities removed from the framework: GENUSPOWER, MSPL, DPSCLTD, NRBBEARING, SHAREINDIA, and NUVAMA
  • Minimum 35% margin requirement applies in both Equity and Equity Derivatives segments
  • Margin applies to all open positions as on September 4, 2025 and new positions from September 5, 2025
  • Total of 5 securities remain in the consolidated list after these changes
  • Surveillance measure works in conjunction with other existing exchange surveillance measures

Regulatory Changes

The surveillance framework continues to operate under Regulation 28(3) of SEBI (SAST) Regulations 2011, which monitors companies with high levels of promoter share encumbrance. The framework aims to manage risk associated with securities where promoters have pledged significant shareholdings. This is a continuation of the framework established through earlier circulars NSE/SURV/42507 (October 24, 2019) and NSE/SURV/44169 (April 17, 2020).

Compliance Requirements

  • Trading members must apply minimum 35% margin on newly included securities from September 5, 2025
  • Margin requirements apply to both existing open positions (as on September 4, 2025) and new positions
  • Trading members should update their systems to reflect securities being removed from the framework
  • Companies can submit representations by 5:00 PM on September 3, 2025 if they wish to contest their inclusion
  • All surveillance measures are subject to periodic review by the exchange

Important Dates

  • September 3, 2025: Effective date for removal of 6 securities from the surveillance framework
  • September 3, 2025, 5:00 PM: Deadline for company representations regarding inclusion in the framework
  • September 4, 2025: Reference date for existing open positions subject to new margin requirements
  • September 5, 2025: Effective date for 35% margin requirement on newly included securities

Impact Assessment

The changes affect 9 securities directly - 3 additions requiring higher margins and 6 removals providing margin relief. For the newly included securities, traders and investors will face increased margin requirements of 35%, potentially reducing leverage and trading volumes. The removal of 6 securities from the framework will provide relief by reducing margin requirements to normal levels. The consolidated list maintains only 5 securities under surveillance, indicating an overall reduction in securities under this specific surveillance measure. This is a routine surveillance action and should not be construed as adverse action against the companies involved.

Impact Justification

Affects margin requirements for specific securities but limited to 11 stocks total; routine surveillance measure implementation.