While placing order why do I get an alert that the stock is under ESM ?

While placing a an order in Stocks categorized under ESM, you may get a pop up as seen below. Let's check what this means?

This alert is generated to help traders / investors make informed decision before they mark a trade.

SEBI, in order to enhance market integrity and safeguard interest of investors, have been introducing various enhanced surveillance measures such as GSM, ASM, ESM, reduction in price band, periodic call auction and transfer of securities to Trade to Trade segment etc., from time to time. Such categorization of stocks depends upon market capitalization, volatility and other factors.  

To help traders and investors, identify such categorization, Exchanges have mandated brokers to generate an alert to clients whenever they initiate a trade in such stocks. As mentioned, the basic purpose of this alert is to enable investors take informed decisions while dealing with such stocks. 

ESM (Enhanced Surveillance Measure) is introduced for Micro Small Companies where market capitalization  is less than 500 crores. When these Micro Small Companies fall under certain parameters as fixed by Exchanges based on their Price Variation, SD (standard deviation) etc., they are then marked under ESM.

There are 2 stages in ESM which are Stage I and Stage II

Stage 1 

a) The stock will be under Trade to Trade settlement. Stocks bought under Trade to Trade cannot be sold until delivery is received in the demat account

b) Trades with a price band of 5% or

c) Trades with a Price band of 2% (if the stock is already under 2% band)

Stage II 

a) The stock will be under Trade to Trade settlement 

b) Trades with a price band of 2% and 

c) Trading will be allowed on all trading days through Periodic Call Auction

You can purchase these stocks on Navia Trading Platform, while such transactions are restricted on Rocket Plus. However, ESM stocks can be sold in both trading platforms if they are held in the demat account.


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