BSE provides clarity on graded surveillance measures

Buyers of shares that are under an advanced stage of graded surveillance measures will be charged "additional surveillance deposit", according to the BSE.
The measures, introduced recently, are aimed at alerting market participants to be "extra-cautious and diligent" in dealing with certain securities.
Coming out with a detailed set of frequently asked questions (FAQs) on the measures today, BSE said the trading member has to collect the additional surveillance deposit (ASD) for all applicable transactions.
"The ASD is charged to the buyer of the transaction. It is not charged to the seller. The buyer shall be charged even if he enters into another sell transaction in the said security," the exchange said.

The trading member has to collect the ASD for all applicable transactions, including on those done "on own account as well as transactions done in client account including the institutional transactions".
It has to be paid in cash only, BSE said.

"ASD shall not be refunded or adjusted even if securities purchased are sold off at the later stage within a quarter. ASD shall be retained till review of the GSM (graded surveillance measures) stages i.E. Quarterly review," it added.
In the first stage of GSM, the particular scrip will be transferred to the trade for trade segment with an applicable price band of 5 per cent or lower.

Out of the total six stages, ASD requirement will kick in from the second stage onwards.
The GSM will be in place for securities that see an abnormal price rise, which is not commensurate with financial health and fundamentals such as earnings and book value.
"The underlying principle behind defining various stages under GSM framework is to alert the market participants that they need to be extra cautious and diligent while dealing in such securities as the need has been felt to place them under higher level of surveillance," the BSE said.
These measures will be implemented in a coordinated manner across the stock exchanges where the securities concerned are listed.

Every quarter, reviews will be carried out for the securities concerned and depending on the progress made, they could be moved back from a higher to a lower stage in a sequential manner.