Description

NSE implements Enhanced Surveillance Measure (ESM) on select securities with 100% margin requirement and trade-for-trade settlement effective January 2, 2026.

Summary

NSE has issued circular NSE/SURV/72085 dated December 31, 2025, regarding the applicability of Enhanced Surveillance Measure (ESM) on select securities. The exchange will implement a minimum 100% margin requirement on identified securities and shift them from Rolling Settlement to Trade-for-Trade segment effective January 2, 2026. Securities moving to Stage II will be subject to Periodic Call Auction with a 2% price band effective January 1, 2026.

Key Points

  • One security (SANCO - Sanco Industries Limited, ISIN: INE782L01012) has been shortlisted for ESM Stage I effective January 1, 2026
  • Four securities are moving from ESM Stage I to Stage II: ANONDITA (Anondita Medicare Limited), DHTL (Docmode Health Technologies Limited), NORBTEAEXP (Norben Tea & Exports Limited), and SOMATEX (Soma Textiles & Industries Limited)
  • No securities are moving from Stage II to Stage I
  • No securities are being excluded from the ESM framework
  • 100% margin will be applied to all open positions as on January 1, 2026, and new positions from January 2, 2026
  • Securities will be shifted from Rolling Settlement segment (Series: EQ/SM) to Trade-for-Trade segment (Series: BE/ST)
  • Stage II securities will be under Trade-for-Trade with 2% price band under Periodic Call Auction
  • The ESM framework operates in conjunction with all other prevailing surveillance measures

Regulatory Changes

The circular implements the Enhanced Surveillance Measure framework as per previous circulars (NSE/SURV/56948, NSE/SURV/57609, NSE/SURV/63361, NSE/SURV/64066, NSE/SURV/64400, and NSE/SURV/69315). Securities meeting ESM criteria will be subject to:

  • Mandatory 100% margin requirement on all positions
  • Shift from normal rolling settlement to Trade-for-Trade settlement, eliminating intraday trading
  • For Stage II securities: Periodic Call Auction mechanism with restricted 2% price band
  • Change in series designation from EQ/SM to BE/ST

Compliance Requirements

  • Market participants must ensure 100% margin is maintained for all open positions in affected securities as on January 1, 2026
  • New positions created from January 2, 2026, in these securities will require 100% upfront margin
  • Trading members must note that affected securities will only be available for Trade-for-Trade settlement (no intraday squaring off)
  • Investors should be aware of the 2% price band restriction for Stage II securities under Periodic Call Auction
  • Members may contact surveillance@nse.co.in for queries
  • Detailed information available at: https://www.nseindia.com/regulations/enhanced-surveillance-measure-esm

Important Dates

  • December 31, 2025: Circular issued
  • January 1, 2026: Stage II securities come under Trade-for-Trade with 2% price band under Periodic Call Auction; 100% margin applied to open positions
  • January 2, 2026: Securities shifted to Trade-for-Trade segment (Series: BE/ST); 100% margin applicable on new positions

Impact Assessment

The ESM framework will significantly impact trading in the affected securities:

Liquidity Impact: Shift to Trade-for-Trade settlement will eliminate intraday trading opportunities, substantially reducing trading volumes and liquidity in these securities.

Capital Requirements: The 100% margin requirement means investors cannot use leverage, requiring full upfront payment for purchases. This will reduce retail participation and trading activity.

Price Discovery: Stage II securities under Periodic Call Auction with 2% price band will have restricted price movement, potentially affecting efficient price discovery.

Market Perception: ESM inclusion signals heightened surveillance concerns, though the exchange clarifies this should not be construed as adverse action against the companies.

Investor Protection: The measures aim to protect investors by reducing speculative activity and excessive volatility in securities exhibiting unusual price/volume patterns.

Affected securities include SANCO (new to Stage I) and four securities transitioning to the more restrictive Stage II (ANONDITA, DHTL, NORBTEAEXP, SOMATEX). A consolidated list reference to ALPSINDUS suggests additional securities remain under the framework.

Impact Justification

Imposition of 100% margin requirement and shift to trade-for-trade settlement significantly impacts trading in affected securities, restricting liquidity and intraday trading.