Stocks Under ASM : A Comprehensive Overview

Introduction

The Securities and Exchange Board of India (SEBI) and the stock exchange have taken an initiative known as an Additional Surveillance Measure (ASM). It helps to improve market integrity and lower volatility in certain equities. ASM is designed to protect investors by monitoring any market speculation and sudden stock price swings. It ensures the safety of investors and improves the credibility of the market.

Stocks classified as ASM are subject to strict trading constraints, including higher margins and limited intraday leverage. SEBI categorises high-risk and volatile stocks as ASM.

Framework of ASM Stocks

• 100% Margin Requirement: Every trade on ASM stock requires a margin equal to 100% of the traded value. There is no intraday leverage, so traders must put up their entire stake.

• Corporate Actions: The acts of invested companies (such as dividends, stock splits, and bonuses) are unaffected. Stockholders get the same advantages as they get for non-ASM stocks.

• Collateral Value Reduction: The collateral value displayed on trading terminals is reduced by the amount associated with a stock when it is added to the ASM list.

• Consent: Before placing an order for any stock that is listed on the ASM, investors must give their express consent.

• Restrictions on Pledging: Stocks under ASM cannot be pledged by investors as security for loans. The collateral margins are revoked in the event that a pledged stock falls inside the ASM category. Until the stock is taken off the ASM list, investors may choose to keep it without receiving collateral or unpledge it.

• Transition to Trade for Trade sector: ASM-listed equities may be transferred into the Trade for Trade sector, which permits only delivery-based purchases and sales and prohibits intraday trading.

How does ASM Help?

The ASM system was introduced to discourage speculative trading, market manipulation, and sudden stock price volatility. Stocks designated for ASM are examined based on price movement, market volatility, volume variance, and other standards. These limits guard investors against the risks posed by sudden changes in the market.

The goal of including stocks on the ASM list is to improve awareness among investors and provide caution while transacting in these equities. However, the ASM framework's main purpose is market surveillance and should not be misunderstood as an action against investing in concerned organisations.

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List of ASM Stocks

According to the NSE, the stocks are shifted to the ASM category based on specific criteria. They are classified as either long-term or short-term ASM.

Here is the list of long-term ASM stocks listed on NSE as off 22/10/2024

List of short-term ASM stocks listed on NSE as off 22/10/2024​​​​​​​

Conclusion​​​​​​​

The ASM structure is meant to protect regular investors by limiting stocks with high-risk qualities. Trading in ASM-listed stocks should be done carefully since trading conditions differ greatly from those of ordinary stocks. Understanding which stocks are under observation and adjusting trading plans depend on routinely monitoring the list of ASM stocks.

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