Description

NSE notifies inclusion and movement of securities under Enhanced Surveillance Measure (ESM) framework effective May 18-19, 2026, with mandatory 100% margin and shift to Trade-for-Trade segment.

Summary

NSE has issued a circular (Ref. No. 367/2026) updating the list of securities under the Enhanced Surveillance Measure (ESM) framework. Five securities are newly included under ESM Stage I, one security is moving from Stage I to Stage II, and several securities are moving from Stage II back to Stage I. All affected securities will shift from Rolling Settlement (EQ/SM series) to Trade-for-Trade segment (BE/ST series) effective May 19, 2026.

Key Points

  • Five securities newly included in ESM Stage I: KANORICHEM, NGIL, SHERA, SMARTLINK, and VIVIDEL, attracting 100% margin w.e.f. May 19, 2026
  • Newly included securities will shift from EQ/SM to BE/ST series effective May 19, 2026
  • AVATAR Industries Limited moves from ESM Stage I to Stage II, subject to Trade-for-Trade with 2% price band under Periodic Call Auction w.e.f. May 18, 2026
  • CAPTRUST, JITFINFRA, and KALANA move from ESM Stage II back to Stage I w.e.f. May 18, 2026
  • A consolidated list of all securities under the ESM framework is provided in Annexure III
  • ESM shortlisting is purely for market surveillance purposes and should not be construed as adverse action against the company

Regulatory Changes

Securities moving out of the ESM framework will have their price bands reinstated to the applicable band before ESM shortlisting, subject to the condition that the scrip is not part of any other surveillance measure. The ESM framework operates in conjunction with all other prevailing surveillance measures imposed by Exchanges.

Compliance Requirements

  • NSE members must apply a minimum 100% margin on all open positions as on May 18, 2026, and on new positions created from May 19, 2026 for newly included ESM Stage I securities
  • Members must note the segment shift from Rolling Settlement (EQ/SM) to Trade-for-Trade (BE/ST) for affected securities
  • Securities moving to Stage II (AVATAR) will be subject to Periodic Call Auction with a 2% price band effective May 18, 2026
  • Members may contact surveillance@nse.co.in for further queries

Important Dates

  • May 15, 2026: Circular issued
  • May 18, 2026: Stage I to Stage II and Stage II to Stage I movements take effect; Periodic Call Auction with 2% price band begins for Stage II securities
  • May 19, 2026: New ESM Stage I inclusions take effect; 100% margin applicable on new positions; EQ/SM to BE/ST segment shift effective

Impact Assessment

This circular has high market impact for traders and investors holding positions in the affected securities. The mandatory 100% margin requirement significantly increases the cost of holding positions in newly included ESM Stage I stocks (KANORICHEM, NGIL, SHERA, SMARTLINK, VIVIDEL). The shift to Trade-for-Trade settlement eliminates netting benefits and reduces liquidity. AVATAR Industries faces further restrictions under Stage II with a restrictive 2% price band under Periodic Call Auction, severely limiting price discovery. Investors in CAPTRUST, JITFINFRA, and KALANA see some relaxation as they move back from Stage II to Stage I.

Impact Justification

Directly affects trading conditions for multiple securities with mandatory 100% margin requirement and segment shifts from Rolling Settlement to Trade-for-Trade, materially impacting liquidity and trading costs for affected stocks.