Has one of your stocks suddenly stopped moving? Or have you invested in a company whose stocks can't be easily bought or sold? That's a red flag! Here's why – SEBI and the Exchanges might have placed them under Additional Surveillance Measures (ASM) or Graded Surveillance Measures (GSM) to enhance market integrity and safeguard the interests of investors.
About ASM: ASM is a system used to keep an eye on stocks that show a lot of ups and downs or unusual trading activity. It looks at things like big price changes, how concentrated the trading is among a few clients, and other factors such as how often the stock is traded, its price changes from one day to the next, its total value, and how many different people are trading it. This system has two parts: one for watching over these stocks in the short term and another for the long term, both aimed at reducing the risks of market manipulation and excessive speculation.
Surveillance Actions for ASM Stocks:
No intraday leverage is allowed for ASM-listed stocks
Corporate actions aren't impacted by a stock being under ASM. Benefits of a bonus, dividend, stock split, etc., are passed on to the shareholder
Investors can't pledge ASM-listed stocks. If a stock pledged by an investor is moved under ASM, collateral margins will no longer be provided for that stock.
While placing an order for security under the ASM list, the investor needs to provide consent for placing the order.
Being listed under ASM imposes stricter trading conditions for the stock but doesn't necessarily indicate a company's poor health. SEBI and the Exchanges review this list bi-monthly, allowing stocks to be removed from the list if they show improvement.
About GSM: While ASM controls volatility, GSM acts like a safety net for the stock market. It focuses on stocks with sudden price changes or poor financial health. These stocks are also known as penny stocks and they are usually very risky, hard to trade, and have a low value. GSM listed stocks are subject to many rules and checks by the Exchanges and they aim to warn investors to be cautious before they invest in them.
ASM vs GSM