Small and Medium Enterprise (SME) stocks have seen quite a bit of action lately. In order to avoid excessive speculation in SME stocks, the exchanges will be introducing Short Term Additional Surveillance Measure (ST-ASM) framework for the SME category.
What is an SME and where are they listed?
With an intention that small and medium-sized enterprises (SMEs) companies should also have access to capital markets, NSE and BSE have introduced their SME platforms where those companies with a minimum post-issue capital of Rs 1 crore and a maximum of Rs 25 crore are eligible for SME IPO in India.
You can check the difference between SME and Mainboard IPO here
What is the ASM framework?
Additional Surveillance measure (ASM) is an initiative by the SEBI and exchanges to safeguard the interests of the investors and enhance market integrity. The stocks are moved to the ASM category based on certain criteria found in the NSE FAQ (PDF). Stocks under ASM are divided into two categories, i.e. long-term ASM (WEB) and short-term ASM (WEB) Visit nseindia.com/reports/asm to see the list of stocks under the ASM category.
The surveillance actions applicable to these stocks are as follows: Securities under ASM are further monitored and moved in the trade-to-trade (T2T) segment if the criteria are met.
What happens when a stock moves into the T2T segment?
Exchanges move highly speculative stocks or those suspected of price manipulation to the Trade to Trade (T2T) segment. Intraday and BTST trades are not allowed in the T2T segment, as all buy and sell transactions will be compulsorily delivered.
NSE & BSE’s latest circular on ASM Framework for SME Stocks:
- As per NSE & BSE’s latest circular, the short term ASM will now be applicable to SME stocks with effect from October 3, 2023.
You can check the criteria for identification of such stocks:
You can check the NSE and BSE circulars here :
https://archives.nseindia.com/content/circulars/SURV58558.pdf
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