ASM, index inclusion and exclusion based on market surveillance, clarifies NSE

The National Stock Exchange has issued clarification on the applicability of Additional Surveillance Measure (ASM) framework for listed companies. In a statement, the market regulator said that the shortlisting of securities under ASM is purely on account of market surveillance. As per the market regulator, the applicable surveillance actions shall be under the provision of the long-term surveillance measure.

“Applicable rate of margin shall be 100% w.e.f March 22, 2023 on all open positions as on March 21, 2023 and new positions created from March 22, 2023 onwards. Additionally, securities qualifying under criteria VII (Scrips shifted to Stage IV) shall be shifted from Rolling Settlement segment (Series:EQ) to Trade-for-Trade segment (Series: BE) w.e.f. March 22, 2023,” the market regulator said.

According to the market regulator, the ASM framework has been introduced in order to enhance market integrity and safeguard investor’s interest. The Securities and Exchange Board of India and stock exchanges have been introducing various enhanced surveillance measures such as graded surveillance measures, reduction in price band, periodic call auction and transfer of securities to the trade-for-trade segment from time-to-time. High low variation, client concentration, close to close price variation, market capitalisation, volume variation, delivery percentage, number of unique PANs and PE are some of the key parameters that are considered by SEBI and stock exchanges for the shortlisting of securities for placing under ASM framework.  

“Market participants may note that ASM framework shall be in conjunction with all other prevailing surveillance measures being imposed by the Exchanges from time to time. Further, it may also be noted that the shortlisting securities under ASM is purely on account of market surveillance and it should not be construed as an adverse action against the company/entity,” it said.

The clarification by the world’s largest derivative exchange comes two days after BSE and NSE moved Adani Green Energy and New Delhi Television (NDTV) to the Stage-I of the long-term ASM framework from Stage-II of the long-term ASM framework beginning March 20, 2023. Last week, the market regulator had also removed Adani Enterprises, Adani Power and Adani Wilmar from the short-term ASM framework.

The stocks of Adani Group were put under the ASM framework following allegations by the U.S.-based short seller against the port-to-energy conglomerate earlier this year. In its 106-page report Hindenburg Research said that key listed Adani firms have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing.  Adani Group, in a point-to-point rebuttal, has denied allegations by Hindenburg Research, and will be taking legal action against the short-seller. Following the release of the Hindenburg report, $120 billion in market capitalisation has been wiped off of Adani Group.