Various Surveillance Measures

Published Oct 17, 2024

The Securities and Exchange Board of India (SEBI) and Exchanges have continuously introduced enhanced surveillance measures to improve market integrity and protect investors. These measures include actions such as:

  • Reduction in price bands
  • Periodic call auctions
  • Transfer of securities to the Trade-for-Trade segment

 

The main objectives of these measures are to:

  • Alert and advise investors to exercise extra caution when dealing in certain securities.
  • Encourage market participants to conduct thorough due diligence before engaging with these securities.

 

1. Graded Surveillance Measure (GSM)

In continuation of the various surveillance measures already implemented, SEBI and the Exchanges, following discussions in joint surveillance meetings, have decided to introduce additional Graded Surveillance Measures for securities whose prices are not aligned with their financial health and fundamentals, such as earnings, book value, fixed assets, net worth, P/E ratio, market capitalization, etc.

For the list of affected securities and Exchange circulars on the Graded Surveillance Measure, click HERE

2. Additional Surveillance Measure (ASM)

In continuation of the various surveillance measures already implemented, SEBI and the Exchanges, following discussions in joint surveillance meetings, have decided to introduce Additional Surveillance Measures (ASM) for securities that raise surveillance concerns. These concerns are based on objective parameters such as price/volume variation, volatility, etc.

The shortlisting of securities for placement in ASM is based on an objective criterion jointly decided by SEBI and the Exchanges, covering the following parameters:

  • High-Low Variation
  • Client Concentration
  • Close-to-Close Price Variation
  • Market Capitalization
  • Volume Variation
  • Delivery Percentage
  • Number of Unique PANs
  • P/E Ratio

 

For the list of affected securities and Exchange circulars on Additional Surveillance Measures, click HERE

3. Insolvency resolution process (IRP )

IRP stands for Corporate Insolvency Resolution Process. It is a process under the Insolvency and Bankruptcy Code (IBC), 2016. The Insolvency and Bankruptcy Code, 2016, is the bankruptcy law of India.

In the event that a corporate debtor defaults in the repayment of dues to creditors, the financial creditor(s) have the authority to initiate the insolvency resolution process. This process occurs in stages.

The two categories under this framework are:

  1. Insolvency and Bankruptcy Code (IBC)
  2. Inter-Creditor Agreement (ICA)

 

For the list of securities and Exchange circulars related to the Insolvency and Bankruptcy Code (IBC) / Inter-Creditor Agreement (ICA), click HERE

4. Enhanced Surveillance Measure (ESM)

SEBI and the Exchanges, in a joint meeting, have decided to introduce the ESM (Enhanced Surveillance Measure) framework for Micro-Small Companies (listed on the main board with a market capitalization of less than ₹500 crores), effective from June 5, 2023.

For more details, you can refer to Exchange circulars HERE

For Consolidated list of Surveillance indicators click here

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