Description

NSE clarifies surveillance framework for companies under Insolvency and Bankruptcy Code (IBC) with detailed staging criteria and trading restrictions.

Summary

NSE has issued a clarification on the surveillance framework for securities of companies under the Insolvency and Bankruptcy Code (IBC). The circular reiterates that surveillance actions apply specifically to scrips with recommencement of trading post IBC and provides detailed staging criteria with corresponding trading restrictions.

Key Points

  • Surveillance framework applies only to scrips with recommencement of trading post IBC
  • Two-stage surveillance system (Stage I and Stage II) based on price volatility criteria
  • Securities can exit surveillance after attaining non-promoter holding ≥25% and completing 3 calendar months
  • Different frameworks for non-derivative securities and securities with derivative products
  • Weekly review for Stage I and monthly review for Stage II inclusions

Regulatory Changes

  • Clarification that surveillance action under corporate announcement/disclosure applies specifically to post-IBC trading recommencement
  • Updated framework with clear exit criteria based on non-promoter holding thresholds
  • Defined review periods for stage movements and exits

Compliance Requirements

Stage I Surveillance:

  • Gross settlement + ±5% price band + 100% margin from T+2 day
  • ASD (100% Trade Value) to be deposited by buyer
  • Once a week trading restrictions

Stage II Surveillance:

  • Same restrictions as Stage I plus potential restriction of no upward movement
  • Monthly review for stage movement consideration

Exit Criteria:

  • Non-promoter holding ≥25% achievement
  • Completion of subsequent 3 calendar months from attaining the holding threshold

Important Dates

  • Circular effective: September 5, 2025
  • Review schedules: Daily basis for Stage I inclusion, Monthly basis for Stage II inclusion
  • Exit review: Last trading day of the month after minimum 1 month in respective stage

Impact Assessment

High Impact on:

  • Companies under IBC with resumed trading operations
  • Investors trading in IBC-affected securities
  • Market makers and institutional traders dealing with such scrips

Trading Implications:

  • Restricted trading frequency (once per week)
  • Higher margin requirements (100%)
  • Limited price movement (±5% bands)
  • Additional surveillance deposits required from buyers

This framework ensures investor protection while allowing controlled trading in securities of companies emerging from insolvency proceedings.

Impact Justification

Clarifies critical surveillance framework for IBC companies affecting trading conditions and investor protection