Description

NSE circular regarding securities being placed under Enhanced Surveillance Measure (ESM) framework with 100% margin requirement and trade-for-trade settlement effective January 27, 2026.

Summary

NSE has issued a circular updating the Enhanced Surveillance Measure (ESM) framework. One security (Kody Technolab Limited) has been newly included in ESM Stage-I effective January 23, 2026. The affected security will be shifted from rolling settlement (EQ/SM series) to trade-for-trade segment (BE/ST series) from January 27, 2026, and will attract a minimum 100% margin on all open and new positions. No securities are being excluded from the ESM framework or moved between stages.

Key Points

  • Kody Technolab Limited (Symbol: KODYTECH, ISIN: INE0Q7P01013) added to ESM Stage-I
  • 100% margin requirement applicable on all open positions as on January 23, 2026, and new positions from January 27, 2026
  • Security will shift from Rolling Settlement segment (EQ/SM) to Trade-for-Trade segment (BE/ST) from January 27, 2026
  • Securities moving to Stage-II will be under Trade-for-Trade with 2% price band under Periodic Call Auction from January 23, 2026
  • No securities are being excluded from ESM framework (Annexure II shows Nil)
  • No securities are moving between Stage-I and Stage-II
  • ESM framework operates in conjunction with all other prevailing surveillance measures
  • Consolidated ESM list includes multiple securities including Alps Industries Limited, Anondita Medicare Limited, Dhariwalcorp Limited, and others in Stage-II

Regulatory Changes

The ESM framework continues to apply enhanced surveillance measures on securities meeting specific criteria. Securities under ESM are subject to:

  • Minimum 100% margin requirement on all positions
  • Migration from normal rolling settlement to trade-for-trade settlement
  • Stage-II securities additionally face periodic call auction with 2% price band
  • Enhanced monitoring by the exchange surveillance department

Compliance Requirements

  • NSE members must ensure 100% margin collection for KODYTECH effective January 27, 2026
  • Margins apply to both existing open positions (as on January 23, 2026) and all new positions created from January 27, 2026
  • Trading members must comply with trade-for-trade settlement requirements (no intraday squaring off)
  • Members should inform clients about the enhanced surveillance status and associated trading restrictions
  • All positions must be delivered or settled; no netting of buy and sell trades

Important Dates

  • January 22, 2026: Circular issued (Ref No: NSE/SURV/72443, Circular No: 55/2026)
  • January 23, 2026: ESM inclusion effective date; Stage-II securities move to Trade-for-Trade with 2% price band under Periodic Call Auction
  • January 27, 2026: 100% margin requirement becomes applicable; KODYTECH shifts from EQ/SM to BE/ST series

Impact Assessment

Trading Impact: Securities under ESM face severe liquidity constraints due to trade-for-trade settlement requirements, eliminating intraday trading opportunities. The 100% margin requirement significantly increases capital costs for traders and investors.

Market Participants: Retail and institutional traders holding positions in KODYTECH must arrange for full margin by January 27, 2026. Existing positions as on January 23, 2026, will also require 100% margin.

Investor Implications: The ESM designation serves as a warning signal about potential price manipulation, volatility, or other surveillance concerns. While not an adverse action against the company, it indicates heightened regulatory scrutiny.

Liquidity Impact: Trade-for-trade settlement typically reduces trading volumes and liquidity as it prevents intraday speculation and requires mandatory delivery of all trades.

Price Volatility: Enhanced surveillance measures may lead to increased price volatility in the short term as traders adjust positions to meet margin requirements and adapt to new trading restrictions.

Impact Justification

Securities under ESM face 100% margin requirement and trade-for-trade settlement, significantly restricting trading flexibility and liquidity for affected stocks.