Description

NSE adds Vaxtex Cotfab Limited to ESM Stage-I and moves Sab Events & Governance Now Media Limited to ESM Stage-II with 100% margin requirements and trade-for-trade restrictions effective November 27, 2025.

Summary

The NSE has issued updates to its Enhanced Surveillance Measure (ESM) framework, adding one new security to ESM Stage-I and moving one security from Stage-I to Stage-II. Vaxtex Cotfab Limited (VCL) enters ESM Stage-I, attracting a minimum 100% margin requirement and shifting from rolling settlement (EQ/SM) to trade-for-trade segment (BE/ST) effective November 27, 2025. Sab Events & Governance Now Media Limited (SABEVENTS) moves from Stage-I to Stage-II, facing additional restrictions including a 2% price band under periodic call auction from November 26, 2025.

Key Points

  • Vaxtex Cotfab Limited (VCL, ISIN: INE098201036) added to ESM Stage-I effective November 26, 2025
  • 100% margin requirement applicable on all open positions as on November 26, 2025, and new positions from November 27, 2025
  • VCL shifts from Rolling Settlement segment (EQ/SM) to Trade-for-Trade segment (BE/ST) from November 27, 2025
  • Sab Events & Governance Now Media Limited (SABEVENTS, ISIN: INE860T01019) escalated from Stage-I to Stage-II
  • Stage-II securities placed under Trade-for-Trade with 2% price band under Periodic Call Auction from November 26, 2025
  • No securities excluded from ESM framework in this update
  • No securities moving from Stage-II back to Stage-I
  • ESM framework operates in conjunction with all other prevailing surveillance measures

Regulatory Changes

The ESM framework continues to apply stringent surveillance measures on securities meeting specific criteria. Securities in Stage-I face 100% margin requirements and trade-for-trade restrictions, limiting intraday trading and requiring full upfront payment. Securities escalating to Stage-II face additional constraints with a 2% price band under periodic call auction mechanism, further restricting price movement and trading flexibility.

Compliance Requirements

  • All NSE members must ensure 100% margin collection on ESM Stage-I securities (VCL) for all open positions as on November 26, 2025
  • 100% margin mandatory on all new positions created from November 27, 2025 in ESM securities
  • Members must transition VCL trading from EQ/SM series to BE/ST series effective November 27, 2025
  • SABEVENTS trading must comply with Stage-II restrictions including 2% price band under periodic call auction from November 26, 2025
  • Members should monitor the consolidated ESM list (Annexure III) for complete inventory of affected securities
  • Queries may be directed to surveillance@nse.co.in

Important Dates

  • November 25, 2025: Circular issued
  • November 26, 2025: ESM Stage-I measures become applicable; SABEVENTS enters Stage-II with 2% price band under periodic call auction; 100% margin requirement on open positions
  • November 27, 2025: VCL shifts from EQ/SM to BE/ST series; 100% margin on new positions begins

Impact Assessment

Market Impact: The ESM measures significantly reduce liquidity in affected securities by restricting intraday trading and requiring full upfront capital. The 100% margin requirement eliminates leverage opportunities, potentially reducing trading volumes. For VCL, the transition to trade-for-trade settlement removes the ability to square off positions intraday, requiring delivery settlement for all trades.

Operational Impact: Brokers and trading members must update risk management systems to enforce 100% margin collection on ESM securities. The shift from rolling settlement to trade-for-trade requires operational adjustments in settlement processes. Stage-II restrictions on SABEVENTS with 2% price bands under periodic call auction further limit trading flexibility and price discovery.

Investor Impact: Retail and institutional investors holding positions in these securities face increased capital requirements and reduced liquidity. The trade-for-trade mechanism increases holding costs and settlement obligations. The ESM listing serves as a surveillance signal regarding unusual market behavior, though the exchange clarifies this should not be construed as adverse action against the companies.

Risk Consideration: The consolidated ESM list includes multiple securities across both stages, indicating ongoing market surveillance activity. Investors should review the complete list and assess portfolio exposure to ESM securities, considering the amplified margin requirements and trading restrictions.

Impact Justification

ESM framework imposes stringent 100% margin requirements and trade-for-trade restrictions, significantly impacting liquidity and trading activity for affected securities. Stage-II securities additionally face 2% price band under periodic call auction.