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Notice Number 3

The SEBI and Exchanges have introduced an Enhanced Surveillance Measure (ESM) framework for Micro-Small Companies with market caps under 500 crores, effective June 5, 2023. Stocks will be shortlisted based on price variation criteria, and securities such as Public Sector Enterprises and those with derivative products will be excluded. The framework includes stage-wise surveillance actions with specific conditions for entry and exit, reviewed weekly.

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3 views

Notice Number 3

The SEBI and Exchanges have introduced an Enhanced Surveillance Measure (ESM) framework for Micro-Small Companies with market caps under 500 crores, effective June 5, 2023. Stocks will be shortlisted based on price variation criteria, and securities such as Public Sector Enterprises and those with derivative products will be excluded. The framework includes stage-wise surveillance actions with specific conditions for entry and exit, reviewed weekly.

Uploaded by

financeclasroom
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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NOTICES

Notice No. 20230602-44 Notice Date 02 Jun 2023


Category Trading Segment Equity

Subject Enhanced Surveillance Measure (ESM)

Content

SEBI and Exchanges in a joint meeting have decided to introduce ESM framework for Micro-
Small Companies (on main board with market cap less than 500 crores) with effect from June 05,
2023.

The following criteria shall be made applicable for selection of stocks in the Enhanced Surveillance
Measure for Micro-Small Companies

A. Shortlisting criteria (Stage 1): Either below condition 1 or 2 is met:


1) High–Low Price Variation (based on corporate action adjusted prices) in 3 months OR 6
months OR 12 months > 1 Standard deviation (of High-Low variation of all Micro-Small Cap
Companies as defined above).
AND
Minimum threshold of High-Low variation would be as under:
3 months > 75%,
6 months > 100%
12 months > 150%.

2) Close–to–Close Price Variation (based on corporate action adjusted prices) in 3 months OR 6


months OR 12 months > 1 Standard deviation (of Close–to–Close Price variation of all Micro-
Small Cap Companies as defined above).
AND
Minimum threshold of Close-to-close variation would be as under:
3 months > 50%
6 months > 75%
12 months > 100%.

The following securities shall be excluded from the process of shortlisting of securities under ESM:
· Public Sector Enterprises and Public Sector Banks
· Securities on which derivative products are available.

B. The stage wise movement: Following shall be the stage wise surveillance action after inclusion
in ESM:
Stage Conditions for Entry Action
I Identification of securities based on entry Applicable margin shall be 100% from
criteria as given in Part A above. T+2 day.
AND
Trade for Trade settlement with price
band of 5%
OR
2% (In case scrip is already in 2%
band)
II Stocks which are already in Stage I Trade for Trade settlement with price
satisfying the following conditions band of 2%.
a) In 5 consecutive trading days: AND
Close–to–Close Variation (based on Trading permitted once a week with
corporate action adjusted prices) ≥ Periodic Call Auction.
(+15%)
OR
b) On a monthly basis:
Close–to–Close Variation (based on
corporate action adjusted prices) ≥
(+30%)

Notes:
1. Stage-wise review of securities shall be on a weekly basis.
2. Security shall be part of the framework for a minimum period of 90 calendar days. However,
in case a security is under stage 2 of the Framework, it shall be retained under stage 2 for a
minimum period of 1 month. After completion of 1 month, in weekly stage review if such
security’s close to close price variation is less than 8% in a month, it can move to stage 1 of
the Framework.
3. Securities completing 90 calendar days (subject to meeting of aforesaid condition in point 2)
in the framework shall be eligible for stage-wise exit subject to such securities not meeting the
entry criteria as laid down in point A.
In case of any clarifications, members may contact on following numbers 022 2272 5001/ 1717/5158.

Yogendra Daxini Saji Sunilkumar


Dy. Gen. Manager Senior Manager
Surveillance Surveillance

June 2, 2023

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