Description

NSE implements surveillance measures for securities with high promoter and non-promoter encumbrance, requiring 75% minimum margin in equity and derivatives segments effective January 19, 2026.

Summary

NSE has issued a surveillance circular implementing measures for companies with high promoter and non-promoter encumbrance as per Regulation 28(3) of SEBI (SAST) Regulation 2011. This circular adds Setco Automotive Limited to the surveillance framework and continues monitoring of three other securities. The measure requires a minimum 75% margin in Equity and Equity Derivatives segments effective January 19, 2026.

Key Points

  • Setco Automotive Limited (SETCO) added to surveillance framework effective January 19, 2026
  • 75% minimum margin required on all open positions as of January 16, 2026 and new positions from January 19, 2026
  • Margin requirement applies to both Equity and Equity Derivatives segments
  • No securities are being removed from the framework in this update
  • Consolidated list now includes 4 securities: FMNL, NRAIL, SETCO, and SHALPAINTS
  • This is a continuation of Exchange circular NSE/SURV/51189 dated January 31, 2022
  • Measure works in conjunction with all other prevailing exchange measures

Regulatory Changes

This circular implements enhanced surveillance measures under SEBI (Substantial Acquisition of Shares and Takeovers) Regulation 2011, specifically Regulation 28(3) concerning encumbrance disclosures. The framework targets companies where both promoter and non-promoter shareholdings show high levels of encumbrance, indicating potential financial stress or liquidity concerns.

Compliance Requirements

  • Trading Members: Must ensure 75% minimum margin is maintained for all positions in the affected securities
  • Margin Application: Applies to all open positions as on January 16, 2026 and new positions created from January 19, 2026
  • Scope: Covers both Equity and Equity Derivatives segments
  • Monitoring: Framework subject to periodic review by the Exchange
  • Important Note: Shortlisting under this measure should not be construed as adverse action against the concerned company

Important Dates

  • January 13, 2026: Circular issue date
  • January 14, 2026: Effective date for exclusions from framework (Nil securities in this update)
  • January 16, 2026: Reference date for existing open positions
  • January 19, 2026: Effective date for 75% margin requirement implementation
  • January 19, 2026: Date from which new positions will attract the margin requirement

Impact Assessment

Market Impact: High - The 75% margin requirement significantly restricts leveraged trading in affected securities, likely reducing trading volumes and liquidity. This measure particularly impacts derivatives trading where leverage is typically higher.

Securities Affected:

  1. Setco Automotive Limited (SETCO) - INE878E01021 (newly added)
  2. Future Market Networks Limited (FMNL) - INE360L01017
  3. N R Agarwal Industries Limited (NRAIL) - INE740D01017
  4. Shalimar Paints Limited (SHALPAINTS) - INE849C01026

Operational Impact: Trading members must adjust risk management systems and margin calculations to comply with the enhanced requirements. Position-taking capacity for these securities will be substantially reduced, potentially leading to wider bid-ask spreads and reduced market depth.

Investor Impact: Retail and institutional investors holding positions in these securities will face higher margin requirements, potentially forcing position adjustments or liquidations if additional margin cannot be arranged.

Impact Justification

Imposes stringent 75% minimum margin requirement on affected securities in both equity and derivatives segments, significantly impacting trading liquidity and position-taking capabilities for the listed companies.