Description

NSE updates Enhanced Surveillance Measure framework with securities moving between stages and trade-for-trade segment applicability effective December 8-9, 2025.

Summary

NSE has issued updates to the Enhanced Surveillance Measure (ESM) framework. One security (KCK Industries Limited) will move from ESM Stage-I to Stage-II, while four securities (PATTECH, PROZONER, PURPLEUTED, PVP) will move from Stage-II to Stage-I. Securities qualifying under ESM will be shifted from Rolling Settlement to Trade-for-Trade segment with a minimum 100% margin requirement. Securities moving to Stage-II will be under Trade for Trade with a 2% price band under Periodic Call Auction.

Key Points

  • No new securities added to ESM Stage-I
  • KCK Industries Limited (INE0J1E01027) moves from Stage-I to Stage-II effective December 8, 2025
  • Four securities downgraded from Stage-II to Stage-I: Pattech Fitwell Tube Components Limited, Prozone Realty Limited, Purple United Sales Limited, and PVP Ventures Limited
  • 100% margin applicable on all open positions as of December 8, 2025 and new positions from December 9, 2025
  • Securities under ESM will shift from Rolling Settlement (EQ/SM) to Trade-for-Trade segment (BE/ST) from December 9, 2025
  • Stage-II securities will have 2% price band under Periodic Call Auction from December 8, 2025
  • ESM framework operates in conjunction with other surveillance measures
  • Shortlisting is purely for market surveillance and not an adverse action against companies

Regulatory Changes

Securities qualifying under ESM will be shifted from Rolling Settlement segment (Series: EQ/SM) to Trade-for-Trade segment (Series: BE/ST) effective December 9, 2025. Securities moving to Stage-II will be placed under Trade for Trade with a 2% price band under Periodic Call Auction mechanism. The price band of securities exiting the framework will be reinstated to pre-ESM levels, subject to no other surveillance measures being applicable.

Compliance Requirements

  • Members must ensure 100% margin is collected on all open positions in ESM securities as of December 8, 2025
  • 100% margin required on all new positions created from December 9, 2025 onwards
  • Participants must trade ESM securities only in Trade-for-Trade segment from December 9, 2025
  • Stage-II securities must be traded within 2% price band under Periodic Call Auction
  • Members should refer to consolidated list in Annexure III for complete ESM securities list

Important Dates

  • December 5, 2025: Circular issuance date
  • December 8, 2025: Stage transitions effective; 2% price band for Stage-II securities begins; margin applicable on open positions
  • December 9, 2025: Securities shift to Trade-for-Trade segment; 100% margin on new positions begins

Impact Assessment

The changes affect five specific securities with varying impacts. KCK Industries faces increased restrictions by moving to Stage-II, including stricter price bands and periodic call auction mechanism, which may reduce liquidity and trading flexibility. Conversely, four securities moving from Stage-II to Stage-I will experience relaxed surveillance measures, potentially improving liquidity. The 100% margin requirement significantly increases capital requirements for traders holding positions in ESM securities. Trade-for-Trade segment classification eliminates intraday trading opportunities, requiring full delivery on all transactions. Market participants trading these specific securities need to adjust their strategies and ensure adequate margin availability. Overall market impact remains limited given the small number of affected securities.

Impact Justification

Affects specific securities with stage movements and margin requirements, but limited scope to few stocks. Important for affected securities' traders.