Description

NSE announces inclusion and exclusion of securities under Enhanced Surveillance Measure (ESM) framework with effect from January 27-28, 2026.

Summary

NSE has issued updates to the Enhanced Surveillance Measure (ESM) framework effective January 27-28, 2026. Kapston Services Limited is being included in ESM Stage-I, requiring 100% margin and shifting to Trade-for-Trade segment. Four securities (GSTL, PROZONER, SALSTEEL, TVSELECT) are moving from ESM Stage-II to Stage-I, indicating reduced surveillance. Securities under ESM will be shifted from Rolling Settlement (EQ/SM) to Trade-for-Trade segment (BE/ST), and Stage-II securities will operate under Periodic Call Auction with 2% price band.

Key Points

  • Kapston Services Limited added to ESM Stage-I effective January 28, 2026
  • Minimum 100% margin requirement on all open positions as of January 27, 2026 and new positions from January 28, 2026
  • Securities shifting from EQ/SM series to BE/ST series (Trade-for-Trade) effective January 28, 2026
  • Stage-II securities under Trade-for-Trade with 2% price band under Periodic Call Auction from January 27, 2026
  • Four securities (GSTL, PROZONER, SALSTEEL, TVSELECT) moving from Stage-II to Stage-I
  • ESM framework operates in conjunction with other prevailing surveillance measures
  • ESM shortlisting is purely for market surveillance and not adverse action against companies

Regulatory Changes

Securities qualifying under ESM undergo the following regulatory changes:

  • Segment Change: Shift from Rolling Settlement segment (Series: EQ/SM) to Trade-for-Trade segment (Series: BE/ST)
  • Margin Requirements: Minimum 100% margin applicable on positions
  • Price Band: Stage-II securities subject to 2% price band under Periodic Call Auction
  • Trading Mechanism: Stage-II securities operate under Periodic Call Auction mechanism
  • Securities moving out of ESM framework will have their original price bands reinstated, unless subject to other surveillance measures

Compliance Requirements

  • Market participants must ensure 100% margin is maintained for securities under ESM Stage-I
  • Trading members must comply with Trade-for-Trade settlement requirements for affected securities
  • Existing open positions in affected securities as of January 27, 2026 will require 100% margin from January 28, 2026
  • All new positions created from January 28, 2026 onwards will attract 100% margin requirement
  • Members should review their positions in affected securities and ensure adequate margins

Important Dates

  • January 23, 2026: Circular issued (Circular Ref. No: 60/2026)
  • January 27, 2026: Stage-II securities shift to Trade-for-Trade with 2% price band under Periodic Call Auction
  • January 27, 2026: Last date for existing positions before margin requirement applies
  • January 28, 2026: 100% margin requirement effective on all positions
  • January 28, 2026: Securities shift from EQ/SM to BE/ST series (Rolling Settlement to Trade-for-Trade)

Impact Assessment

Market Impact:

  • Reduced liquidity for affected securities due to Trade-for-Trade settlement
  • Higher margin requirements (100%) will increase capital costs for traders holding positions
  • 2% price band restriction on Stage-II securities limits price movement and volatility

Trading Impact:

  • Intraday trading eliminated for securities shifted to Trade-for-Trade segment
  • Delivery-based trading only for affected securities
  • Potential reduction in trading volumes due to increased margin requirements

Operational Impact:

  • Traders with existing positions in KAPSTON must arrange 100% margin by January 28, 2026
  • Positive development for GSTL, PROZONER, SALSTEEL, and TVSELECT as they move from stricter Stage-II to Stage-I surveillance
  • Settlement obligations change from T+1 rolling to delivery-based for affected securities

Investor Considerations:

  • ESM designation is for surveillance purposes and not a negative reflection on company fundamentals
  • Higher entry barriers due to margin requirements may deter speculative trading
  • Members can contact surveillance@nse.co.in for queries

Impact Justification

Significant trading restrictions including shift to Trade-for-Trade segment and 100% margin requirement affecting multiple securities, with immediate impact on trading positions and liquidity.