Securities and Exchange Board of India (SEBI) and Exchanges in order to enhance market integrity and safeguard interest of investors, have been introducing various enhanced pre- emptive surveillance measures such as reduction in price band, periodic call auction and transfer of securities to Trade to Trade category from time to time. The main objective of these measures is to;
In continuation to various surveillance measures already implemented, SEBI and Exchanges, pursuant to discussions in joint surveillance meetings, have decided that along with the aforesaid measures there shall be additional Graded Surveillance Measures on securities which witness an abnormal price rise not commensurate with financial health and fundamentals like Earnings, Book value, Fixed assets, Net-worth, P/E multiple, etc.
At present, there are 6 stages defined under GSM framework viz. From Stage I to Stage VI. Surveillance action has been defined for each stage. Once the security goes into a particular stage, it shall attract the corresponding surveillance action. The security shall be placed in a particular stage by the Exchange based on monitoring of price movement and predefined objective criteria.
Stage wise Surveillance actions are listed below –
| I | Transfer to Trade for Trade with price band of 5% or lower as applicable. |
| II | Trade for Trade with price band of 5% or lower as applicable and Additional Surveillance Deposit (ASD) of 100% of trade value to be collected from Buyer. |
| III | Trading permitted once a week (Every Monday) and ASD of 100% of trade value to be deposited by the buyer. |
| IV | Trading permitted once a week (Every Monday) with ASD of 200% of trade value to be deposited by the buyer. |
| V | Trading permitted once a month (First Monday of the month) with ASD of 200% of trade value to be deposited by the buyer. |
| VI | Trading permitted once a month (First Monday of the month) with no upward movement in price of the security with ASD of 200% of trade value to be deposited by the buyer. |