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Learn what additional surveillance measures are, why exchanges impose them, and how they regulate trading activity in specific securities.
Additional Surveillance Measure, commonly known as ASM, is a regulatory framework introduced by stock exchanges to monitor unusual price and volume movements in listed securities. It is designed to safeguard market integrity, protect investors, and curb excessive speculation. ASM does not suspend trading but places selected stocks under enhanced monitoring to ensure orderly trading conditions in the market.
Additional Surveillance Measure is a mechanism implemented by stock exchanges to closely track stocks that show abnormal price volatility or significant trading activity. The primary purpose of ASM is to protect investors from excessive speculation and potential price manipulation.
When a stock is placed under ASM, it remains available for trading but may be subject to stricter conditions such as higher margin requirements. These measures aim to reduce speculative trading and stabilise price movements. ASM is a preventive step rather than a punitive action and does not necessarily indicate any wrongdoing by the company.
ASM applies to stocks listed on both major Indian stock exchanges, including the National Stock Exchange and the Bombay Stock Exchange. Both exchanges implement ASM based on predefined surveillance parameters.
The exchanges monitor stocks using quantitative criteria such as price fluctuations, trading volumes, and market capitalisation changes. If a stock meets the surveillance thresholds, it may be moved into the ASM framework. The objective remains consistent across exchanges, which is to ensure fair and transparent trading practices.
Additional Surveillance Measure is introduced to maintain discipline and stability in the stock market.
The main reasons include:
Unusual price movements within a short period
Abnormal increase in trading volumes
Excessive speculation in low-liquidity stocks
Protection of retail investors
Prevention of potential market manipulation
By implementing ASM, exchanges aim to reduce systemic risk and enhance overall market confidence.
Additional Surveillance Measure functions through continuous monitoring and phased restrictions.
The working mechanism includes:
Identification of stocks based on predefined price and volume criteria
Placement of such stocks under ASM surveillance
Imposition of additional margin requirements
Possible reduction in trading leverage
Periodic review of stock behaviour
The framework is dynamic and is reviewed regularly by the exchanges. Stocks may move between stages depending on their trading patterns.
Stock exchanges track daily price movements and trading volumes. Sudden spikes in price without fundamental reasons or sharp volume increases may trigger surveillance action. This monitoring helps identify speculative patterns early.
ASM evaluation also considers broader behavioural parameters such as client concentration, volatility, and deviation from benchmark indices. These indicators help determine whether a stock’s movement aligns with general market trends.
ASM is implemented in stages, with progressively stricter conditions at higher levels.
The framework typically includes multiple stages based on the severity of volatility.
Stage I generally involves higher margin requirements for trading the stock. Investors may need to pay 100 percent margin, which reduces leveraged speculation.
In Stage II, margin requirements remain high and may be coupled with restrictions on intraday trading. Trading remains permitted but under tighter conditions.
Stage III may include trade-for-trade settlement, where each trade must be settled individually. This reduces speculative activity significantly.
Stage IV represents the highest surveillance level. It may involve stricter settlement conditions and sustained high margins. However, trading is not completely halted.
Placement under ASM can influence a stock’s liquidity and trading activity. Higher margin requirements often reduce speculative buying and selling, which may lower volatility.
Stocks under ASM may experience reduced volumes, temporary price stabilisation, and cautious investor participation. However, ASM does not directly reflect the financial health or operational performance of the company.
Investors can check whether a stock is under ASM through official exchange platforms.
Common methods include:
Visiting the official website of the stock exchange
Checking surveillance or circular sections
Reviewing periodic exchange announcements
Consulting broker platforms that display ASM status
The ASM list is updated regularly, and investors should verify the latest information before trading.
ASM and GSM are both surveillance mechanisms implemented by stock exchanges, but they serve different objectives.
| Basis | ASM | GSM |
|---|---|---|
Purpose |
Monitor abnormal volatility |
Monitor fundamentally weak stocks |
Focus |
Price and volume behaviour |
Financial health concerns |
Trading Restriction |
Higher margins and monitoring |
Stronger trading restrictions |
Settlement |
May include trade-for-trade |
Often includes trade-for-trade |
Removal |
Based on improved trading behaviour |
Based on financial review |
ASM primarily addresses trading behaviour, while GSM focuses more on companies with potential financial concerns.
A stock may be removed from ASM when it no longer meets the surveillance criteria. Exchanges conduct periodic reviews to assess trading patterns.
If price volatility stabilises and trading activity aligns with normal market behaviour, the stock may be shifted to a lower stage or removed entirely. The decision is based on objective data rather than company announcements.
Additional Surveillance Measure is a protective mechanism designed to maintain fair and orderly markets. It monitors unusual trading patterns and introduces phased restrictions to control speculation. ASM does not imply wrongdoing by a company but reflects heightened monitoring due to volatility. Understanding ASM helps in interpreting market activity related to heightened surveillance.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Additional Surveillance Measure is a framework used by stock exchanges to monitor stocks with abnormal price or volume movements and impose stricter trading conditions.
In NSE, ASM refers to the surveillance mechanism applied to stocks showing unusual trading patterns, often involving higher margin requirements.
Yes, Additional Surveillance Measure is applicable to stocks listed on BSE as well, based on similar monitoring criteria.
Stocks are placed under ASM due to unusual volatility, sudden volume spikes, or excessive speculative activity.
A stock remains under ASM until periodic reviews determine that its trading behaviour has stabilised.
ASM and GSM are different surveillance frameworks, with ASM focusing on trading behaviour and GSM focusing more on financial concerns.
ASM does not completely restrict trading, but it may impose higher margins and stricter settlement conditions.
With a Postgraduate degree in Global Financial Markets from the Bombay Stock Exchange Institute, Nupur has over 8 years of experience in the financial markets, specializing in investments, stock market operations, and project management. She has contributed to process improvements, cross-functional initiatives & content development across investment products. She bridges investment strategy with execution, blending content insight, operational efficiency, and collaborative execution to deliver impactful outcomes.
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