What will happen if shares I have pledged get moved into ASM? Where can I keep track of these stocks?
The additional surveillance initiative is part of SEBI and the Exchanges initiative to enhance market integrity and safeguard the interest of investors.
The surveillance actions applicable to the securities shortlisted for ASM is as under:
- Securities shall be placed in Price Band of 5%
- Margins shall be levied at the rate of 100%
The shortlisted securities shall be further monitored on pre-determined objective criteria and would be moved into Trade for Trade segment once the criteria get satisfied.
Whenever a client buys Equity for Intraday/Delivery, the Exchange blocks our margins at the rate of VaR margin. Check out this FAQ from NSE for a better understanding of Margins & VaR calculation.
Eg: If Reliance VaR margin rate is at 12.5%, for every share of Reliance bought/sold by our client today, the Exchange will block Rs.125 (considering Reliance price is Rs.1000).
For ASM scrips, margins @ 100% imply that the Exchange will block the entire buy/sell value since the VaR margin rate will be 100%. So, another thing in addition to collateral not being available (refer the note below) is that even for MIS trading for such scrips, 100% of the traded value will get blocked as margins i.e no intraday leverage is given.
Read this circular from BSE for more information.
Corporate actions aren’t impacted by a stock being under ASM. All corporate actions like Bonus, dividend, stock split, etc. the benefits are passed on to the shareholder even though scrip is under ASM.
Note: In cases where a stock you have pledged is moved under ASM, you will no longer be provided collateral margins for that stock, because, as per ASM 100% margin should be levied. The collateral value (shown on the trading terminals) will reduce by the value of collateral received against that stock.
You can either unpledge the stock or keep the stock pledged without collateral until the stock is moved out of ASM.
To keep track of stocks moving in & out of GSM/ASM/T2T - refer this consolidated list under utilities on the downloads & resources page, this list will be updated regularly.
Adding to the above information
ASM has been basically brought in to control volatility while GSM exists to safeguard investors against stocks which may be moving out of line with fundamentals. Both are principally different in their intention.
Here is an article suggesting the key differences between ASM GSM T2T.