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Additional Surveillance Measure (ASM)

Anshika

 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.

What Is Additional Surveillance Measure

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.

What Is ASM in NSE and BSE

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.

Why Additional Surveillance Measure Is Introduced

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.

How Additional Surveillance Measure Works

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.

Price and Volume Monitoring

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.

Market Behaviour Parameters

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.

Stages of Additional Surveillance Measure

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 of ASM

Stage I generally involves higher margin requirements for trading the stock. Investors may need to pay 100 percent margin, which reduces leveraged speculation.

Stage II of ASM

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 of ASM

Stage III may include trade-for-trade settlement, where each trade must be settled individually. This reduces speculative activity significantly.

Stage IV of ASM

Stage IV represents the highest surveillance level. It may involve stricter settlement conditions and sustained high margins. However, trading is not completely halted.

Impact of ASM on Stocks

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.

How to Check ASM Stocks List

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.

Difference Between ASM and GSM

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.

When Is a Stock Removed From ASM

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.

Conclusion

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.

Disclaimer

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.

FAQs

What is additional surveillance measure in stock market?

Additional Surveillance Measure is a framework used by stock exchanges to monitor stocks with abnormal price or volume movements and impose stricter trading conditions.

What does ASM mean in NSE?

In NSE, ASM refers to the surveillance mechanism applied to stocks showing unusual trading patterns, often involving higher margin requirements.

Is additional surveillance measure applicable to BSE?

Yes, Additional Surveillance Measure is applicable to stocks listed on BSE as well, based on similar monitoring criteria.

Why are stocks put under ASM?

Stocks are placed under ASM due to unusual volatility, sudden volume spikes, or excessive speculative activity.

How long does a stock remain under ASM?

A stock remains under ASM until periodic reviews determine that its trading behaviour has stabilised.

Is ASM same as GSM?

ASM and GSM are different surveillance frameworks, with ASM focusing on trading behaviour and GSM focusing more on financial concerns.

Does ASM restrict trading completely?

ASM does not completely restrict trading, but it may impose higher margins and stricter settlement conditions.

Hi! I’m Nupur Wankhede
BSE Insitute Alumni

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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