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Sebi, exchanges ease trading rule for stocks under enhanced surveillance framework

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MUMBAI – The Securities and Exchange Board of India (Sebi) in a discussions with the stock exchanges on Tuesday decided to ease rules for trading in stocks that remain under the enhanced surveillance measures (ESM) framework.

Under the existing ESM framework rule, stocks were allowed to trade only once a week. However, trading in them will now be allowed on all days, the exchanges said in a circular.

In trade-for-trade settlement with a price band of 2%, trading in stocks will be allowed on all days. However, the rule of 100% margin remains unchanged, the exchanges said.

All other regulations under the ESM framework remain unchanged. In order to enhance market integrity and safeguard the interest of investors, Sebi and exchanges have taken several enhanced pre-emptive surveillance measures such as reduction in price band, periodic call auction and transfer of securities to trade-for-trade segment.

To enhance this further, exchanges introduced ESM on micro-small companies, with a market capitalisation of less than Rs 500 crore based on parameters such as price variation, standard deviation etc.

There are two stages under the ESM framework – stage I and II – and trade under trade-for-trade with a 5% or 2% price band, whichever is applicable.

Trading under ESM framework is not considered as an extreme condition, but a move to reduce volatility in the stock and avert any potential losses to investors. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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