Exchanges to take additional surveillance measures on stocks with high promoters pledge

Leading stock exchanges BSE and NSE have decided to take additional surveillance measures in order to reduce volatility in stocks having high promoters pledge.

The exchanges have decided to levy minimum margin of 35 per cent on the stock (including stocks in derivatives segment) where promoters pledged their holding by more than 25 per cent of the total equity capital and have a market capitalisation of over Rs 1,000 crore.

Besides, the other criteria that will attract higher margin are concentration of the top 25 clients in trading during the last 30 days is 30 per cent or more and if the price variation between high and low of a scrip is greater than 40 per cent in the last three months.

The new surveillance measure will be implemented with effect from November 1, 2019, the exchanges said in a separate circular.

The decision to implement the additional surveillance measures has been taken in a joint meeting of markets regulator Sebi and exchanges.

According to bourses, the measures are aimed at ensuring market safety and safeguarding the interests of investors.

The surveillance measure is "without prejudice to the right of Sebi and exchanges to take any other surveillance measures, in any manner, on a case to case basis or holistically depending upon the situation and circumstances as may be warranted," the exchanges said in similar-worded circulars.

In June, the Securities and Exchange Board of India board tightened the norms for disclosing the details of pledged shares by promoters.

"The promoters will have to furnish reasons if combined encumbrance crosses 20 percent of the company's equity capital," Sebi had said.

In case the amount of pledged shares of a company is over 20 percent, then its audit panels have to be informed of any undisclosed encumbrance, it had added.