Description

NSE notifies inclusion of securities under Enhanced Surveillance Measure (ESM) framework with 100% margin requirement and movement of securities between ESM stages effective October 27-28, 2025.

Summary

NSE has issued a circular regarding the Enhanced Surveillance Measure (ESM) framework, notifying the inclusion of new securities and movement of existing securities between different ESM stages. Securities qualifying under ESM will be shifted from Rolling Settlement segment to Trade-for-Trade segment with a minimum 100% margin requirement. Additionally, securities moving to Stage II will be placed under Trade-for-Trade with a 2% price band under Periodic Call Auction.

Key Points

  • Two securities (LATTEYS and SIKKO) newly included under ESM Stage-I effective October 28, 2025
  • 100% margin requirement applicable on all open positions as of October 27, 2025 and new positions from October 28, 2025
  • Securities shifting to ESM will move from Rolling Settlement (EQ/SM) to Trade-for-Trade segment (BE/ST)
  • One security (BIRDYS) moving from ESM Stage-I to Stage-II
  • Five securities (NAVKARURB, NECLIFE, SAAKSHI, TECILCHEM, and one more) moving from ESM Stage-II to Stage-I
  • Securities in Stage-II will be under Trade-for-Trade with 2% price band under Periodic Call Auction
  • ESM framework operates in conjunction with all other prevailing surveillance measures
  • Shortlisting under ESM is purely for market surveillance and not an adverse action against companies

Regulatory Changes

New Inclusions in ESM Stage-I:

  • Latteys Industries Limited (LATTEYS, ISIN: INE262Z01023)
  • Sikko Industries Limited (SIKKO, ISIN: INE112X01017)

Movement from Stage-I to Stage-II:

  • Grill Splendour Services Limited (BIRDYS, ISIN: INE0PC901019)

Movement from Stage-II to Stage-I:

  • Navkar Urbanstructure Limited (NAVKARURB, ISIN: INE268H01044)
  • Nectar Lifesciences Limited (NECLIFE, ISIN: INE023H01027)
  • Saakshi Medtech and Panels Limited (SAAKSHI, ISIN: INE0PSK01027)
  • TECIL Chemicals and Hydro Power Limited (TECILCHEM, ISIN: INE014B01011)
  • Tera Software Limited (TERASOFT)

Compliance Requirements

  • Market participants must ensure 100% margin on all open positions in affected securities as of October 27, 2025
  • 100% margin requirement applies to all new positions created from October 28, 2025
  • Trading members must comply with Trade-for-Trade settlement for securities moved from EQ/SM to BE/ST series
  • Participants must adhere to 2% price band restriction under Periodic Call Auction for Stage-II securities
  • All ESM requirements to be followed in conjunction with other applicable surveillance measures

Important Dates

  • October 24, 2025: Circular issued (Circular Ref. No: 823/2025)
  • October 27, 2025: Securities moving to Stage-II come under Trade-for-Trade with 2% price band under Periodic Call Auction; 100% margin applicable on all open positions
  • October 28, 2025: New securities shift from Rolling Settlement (EQ/SM) to Trade-for-Trade segment (BE/ST); 100% margin requirement effective on new positions

Impact Assessment

Trading Impact:

  • Significantly reduced liquidity for affected securities due to Trade-for-Trade settlement requirement
  • Higher capital requirements for market participants holding positions in these securities due to 100% margin
  • Limited price movement (2% band) for Stage-II securities under Periodic Call Auction mechanism

Investor Impact:

  • Existing position holders must arrange for additional margin by October 27, 2025
  • No intraday trading allowed in these securities post migration to Trade-for-Trade segment
  • Compulsory delivery-based settlement for all trades

Market Sentiment:

  • Enhanced surveillance typically indicates concerns about price volatility, concentration of trading, or other risk factors
  • May impact investor confidence in the affected securities
  • However, NSE clarifies this is a surveillance measure and not an adverse action against the companies

Impact Justification

Significant trading restrictions imposed including 100% margin requirement, shift to Trade-for-Trade segment, and 2% price band under Periodic Call Auction for affected securities