SEBI revises ESM framework, stocks allowed to trade on all days
The market regulator Securities and Exchange Board of India (SEBI) along with NSE and BSE Tuesday decided to ease rules for trading in stocks that remain under the Enhanced Surveillance Measure (ESM) framework.
Under the existing ESM framework rule, the stocks were allowed to trade only once a week. Now, this has been revised to all trading days, the exchanges said in a circular. From July 24, 2023, exchanges will permit trading on all days with +/- 2% price band. However, the rule of 100% margin remains unchanged, the exchanges said.
Under revised ESM action, exchanges will allow T2T settlement with 100% margin. Earlier, trading was permitted once a week with Periodic Call Auction.
All other regulations under the ESM framework remain unchanged, the exchanges added.
The revised framework comes days after BSE-listed Mercury EV Tech had moved Securities Appellate Tribunal to challenge the ESM framework.
The ESM framework was introduced last Month for highly volatile “micro-small” companies. These are companies with a market cap of less than ₹500 crore. As per SEBI, high-low price variation and close-to-close price variation are the parameters used to shortlist securities under this framework.
There are two stages under the ESM framework
Under Stage-I, the trading of the securities is settled through a trade-for-trade mechanism with a price band of 5%, or 2%. No revision for Stage-I.
Under Stage-II, the current surveillance action permits trading only once a week. Now, this has been revised to all trading days under periodic call auction with trade-for-trade settlement and 2% price band.
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Updated: 19 Jul 2023, 01:47 AM IST
