Description

NSE introduces surveillance measures for companies with high promoter and non-promoter encumbrance, mandating 75% margin requirement for Indo Tech Transformers Limited effective January 27, 2026.

Summary

NSE has issued surveillance measures for companies with high Promoter and non-Promoter encumbrance under Regulation 28(3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulation 2011. Indo Tech Transformers Limited (INDOTECH) has been newly included in this framework, requiring minimum 75% margin in Equity and Equity Derivatives segments effective January 27, 2026. The consolidated list now contains seven securities under this surveillance measure.

Key Points

  • Indo Tech Transformers Limited (INDOTECH, ISIN: INE332H01014) added to high encumbrance surveillance framework
  • 75% minimum margin required in both Equity and Equity Derivatives segments
  • Margin applies to all open positions as on January 23, 2026 and new positions from January 27, 2026
  • No securities excluded from the framework in this update (Annexure II shows Nil)
  • Seven companies currently under this surveillance measure
  • This is a continuation of Exchange circular NSE/SURV/51189 dated January 31, 2022
  • Measure subject to periodic review and works in conjunction with other exchange measures

Regulatory Changes

This circular implements surveillance measures under Regulation 28(3) of SEBI (SAST) Regulation 2011, which deals with disclosure requirements for encumbrance of shares. The framework targets companies where both promoter and non-promoter shareholding shows high levels of encumbrance (pledging or other forms of security interest on shares).

The enhanced margin requirement of 75% serves as a risk mitigation measure for securities with elevated encumbrance levels, which could indicate financial stress or higher volatility risk.

Compliance Requirements

For Trading Members:

  • Ensure 75% margin collection for INDOTECH in Equity segment effective January 27, 2026
  • Apply 75% margin to Equity Derivatives positions in INDOTECH
  • Maintain margin on existing open positions as on January 23, 2026
  • Apply margin requirements to all new positions created from January 27, 2026
  • Continue monitoring all seven securities listed in the consolidated framework
  • Queries to be directed to surveillance@nse.co.in

For Investors:

  • Higher margin requirements will reduce leverage availability
  • Existing positions will require additional margin funding
  • Trading costs and capital requirements increase significantly

Important Dates

  • January 21, 2026: Circular issued (NSE/SURV/72421, Circular Ref. No: 53/2026)
  • January 22, 2026: Effective date for exclusions from framework (none in this update)
  • January 23, 2026: Cut-off date for existing open positions subject to margin
  • January 27, 2026: Implementation date for 75% margin requirement on INDOTECH

Impact Assessment

Market Impact:

  • Reduced liquidity expected in INDOTECH due to higher margin requirements
  • Trading volumes likely to decline as capital requirements increase by 75%
  • Potential price volatility during transition period
  • Seven companies now face enhanced surveillance and trading restrictions

Investor Impact:

  • Existing position holders must arrange additional margin by January 27, 2026
  • Leverage trading significantly constrained for affected securities
  • Higher capital costs for maintaining positions
  • Retail participation may decline due to increased capital requirements

Companies Under Framework: The consolidated list includes:

  1. Future Market Networks Limited (FMNL, INE360L01017)
  2. Indo Tech Transformers Limited (INDOTECH, INE332H01014) - NEW
  3. N R Agarwal Industries Limited (NRAIL, INE740D01017)
  4. RKEC Projects Limited (RKEC, INE786W01010)
  5. Setco Automotive Limited (SETCO, INE878E01021)
  6. Shalimar Paints Limited (SHALPAINTS, INE849C01026)
  7. Visa Steel Limited (VISASTEEL, INE286H01012)

Risk Considerations: The exchange notes this is not an adverse action against the companies but a risk management measure. However, high encumbrance levels typically indicate:

  • Promoter/shareholder financial stress
  • Potential for forced selling if margin calls on pledged shares
  • Increased counterparty risk
  • Possible corporate governance concerns

This measure works alongside other surveillance frameworks and will be reviewed periodically based on encumbrance levels.

Impact Justification

High margin requirement of 75% imposed on securities with high encumbrance levels significantly impacts trading and liquidity. Directly affects seven listed companies and their investors.