SEBI and exchanges revise ESM framework, allow stocks to trade on all days from July 24

Market regulator SEBI along with NSE and BSE revised the surveillance actions under the Enhanced Surveillance Measures (ESM) framework, said NSE on Tuesday.. Earlier, the stocks under ESM Stage-II were allowed to trade only once a week. Now, this has been revised to all trading days.

From July 24, 2023, exchanges will permit trading on all days with +/- 2% price band.

Under revised ESM action, exchanges will allow T2T settlement with 100% margin. Earlier, trading was permitted once a week with Periodic Call Auction.

The revised framework comes days after BSE-listed Mercury EV Tech had moved Securities Appellate Tribunal to challenge the ESM framework.

On June 2, markets regulator Securities and Exchange Board of India and the exchanges jointly decided to introduce the ESM framework for highly volatile "micro-small" companies. These are companies with a market cap of less than Rs 500 crore. As per SEBI, high-low price variation and close-to-close price variation are the parameters used to shortlist securities under this framework.

In stage I of the ESM framework, the trading of the securities is settled through a trade-for-trade mechanism with a price band of 5%, or 2%, in case the scrip is already in the 2% band. On Tuesday, no change has been announced for the stage I of ESM framework.