- Date : 12/09/2023
- Read: 3 mins
Stop getting lured by the idea of making unreasonable profits in the stock market! Knowing about SEBIs ASM and its list of stocks is essential.
What is ASM?
Stay vigilant to evade potential traps! Additional Surveillance Measures (ASM), introduced by the Securities and Exchange Board of India (SEBI), is a regulatory mechanism to monitor and scrutinise trading activities in specific stocks. It ensures the integrity and stability of the stock market and protects investors from potential market manipulation and price volatility. ASM list in India refers to a list of stocks identified by the SEBI and stock exchanges where enhanced surveillance is applied due to unusual trading activities or other concerns.
Highlights:
- ASM helps identify stocks with potential risks related to price manipulation and speculative activities
- ASM list stocks are subject to increased monitoring and scrutiny
- Investors should stay informed and exercise caution while dealing with ASM-listed stocks
- The ASM list is reviewed every two months, and necessary changes are made
Criteria to determine the ASM list
Stocks are included in the ASM list based on the criteria set by SEBI and exchanges, which consider the following parameters:
- Low & High Price Variation
- Client Concentration
- Volume Variation
- Number of Unique PANs (Permanent Account Numbers)
- Price Variation
- Delivery Percentage
- Price-to-Earnings Ratio
Generally, the ASM list includes stocks that have seen significant price volatility, sudden price movements, abnormal trading volumes, or any other suspicious activities.
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Different ASM measures
Price Bands: The stock's price movement is restricted within a certain percentage range on either side of the previous day's closing price.
Increased Surveillance: There is closer monitoring of trading activities in the stock, including order book analysis and trading patterns.
Additional Reporting: Companies on the ASM list may be required to provide additional disclosures and information to the stock exchanges
Increased Margin Requirements: Certain securities have higher margin requirements to mitigate the risk of price manipulation and speculative activities.
Graded Surveillance Measures (GSM): The GSM list classifies securities based on risk profiles, allowing targeted monitoring and regulation.
Trading Restrictions: ASM places restrictions on the trading activities of certain securities such as limiting intraday trading and short selling.
Surveillance Actions
Surveillance actions for stocks listed under ASM include full-value blocking, where ASM-listed stocks are blocked at their full value without intraday leverage, and adherence to the Trade for Trade segment, where certain ASM stocks are subjected to delivery-based trading only.
Parting Thoughts
ASM is a proactive measure taken by stock exchanges to ensure fair and transparent trading in the market. It helps to identify and address potential risks before they escalate and safeguard the interests of investors.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.
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