What are surveillance measures and risks associated with them?

Surveillance measures are implemented by SEBI and exchanges to proactively monitor securities across markets, ensuring the protection of investors' and traders' interests. Exchanges (PDF) mandate brokers to display a notification mentioning all the surveillance actions on the instrument when the client tries to place an order.

These measures include Additional Surveillance Measure (ASM) (WEB), Graded Surveillance Measure (GSM) (WEB), Inter Creditor Agreement (ICA) (WEB), Enhanced Surveillance Measure (ESM) (WEB) and Promoter's holding pledged (WEB), among others.

You can find the consolidated list of all surveillance measures on this sheet. (DOC).

The risks associated with trading in securities under surveillance measures are as follows:

T2T: If a trade-to-trade (T2T) stock is bought, and the client tries to sell the stocks on the same day, the order will be rejected. However, it can be sold on the next trading day, i.e., T+1 day.

The stocks are transferred to the T2T segment if they are under the following surveillance measures:

LT ASM Stage 4
GSM stage 2 and above
ESM stage 1&2
IBC Stage 1&2

Price band: The securities will be traded with a price band of 5% or lower. The securities are traded with a price band if they are under the following surveillance measures:

LT ASM Stage 4
All stages of GSM
All stages of ESM
All stages of IBC

Margin: Additional margins are levied for securities under surveillance measures. The percentage of additional surveillance deposit (ASD) to be collected and the surveillance measures due to which additional margins are applicable are as follows:

GSM stage 2: 50% ASD
GSM stage 3 and 4: 100% ASD
IBC Stage 1 and 2: 100% ASD

Since Zerodha does not collect ASD, Fresh buying is blocked for instruments in stages where ASD is required. However, existing positions can be exited.

Traded once a week: Securities are traded once a week if they are under the following surveillance measures:

GSM stage 3 and above
IBC stage 2

Periodic call auction: Stocks that meet specific criteria of illiquidity according to SEBI, such as having an average daily number of trades of less than 50 and a daily trading volume of less than 10,000, among other conditions, are included in the periodic call auction category.

The securities are transferred to the T2T segment if they are under the following surveillance measures:

ESM stage 2

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