I recently saw a ledger entry on my Zerodha ledger saying ‘Being additional security deposit for GSM Scrip Gemini Communication Limited trade date xx/xx/xxxx.’ What does this mean? Why is there an additional debit on my ledger?
GSM stands for ‘Graded Surveillance Measure’. In order to enhance market integrity and safeguard interest of investors, Securities
and Exchange Board of India (SEBI) and Exchanges, have been introducing various
enhanced surveillance measures such as reduction in price band, periodic call auction
and transfer of securities to Trade to Trade segment from time to time.
The main objective of these measures are to -
- Alert and advise investors to be extra cautious while dealing in these securities and
- Advise market participants to carry out necessary due diligence while dealing in these securities.
This framework came into effect on 14th March 2017.
The exchanges and SEBI do a quarterly review of securities whose prices move notwithstanding the expectations set my the stock’s fundamentals. In doing so, stocks are graded from category I to category VI.
What this means is, stocks categorised in stage II to stage VI will require the buyer to make an additional security deposit with the exchange for these trades. This deposit is not released once the buyer squares-off the position. In order for the ASM to be released, the stock needs to be promoted to a Stage of surveillance where the requirement of deposit is lower or 0. This is a move to dissuade investors from trading these stocks.
The securities shall move to various stages of GSM in a sequential order from Stage I to Stage VI as and when the criteria for the respective stage is satisfied. This is done on the basis of a quarterly review. More details on this can be found on this NSE FAQ on the subject.
In order to avoid such a deposit being charged and funds being blocked indefinitely for the same, it is best to check if any T2T (trade for trade) stocks you’re trading have been categorised in stage II or above. NSE and BSE, both publish this data on their respective websites.
Also, BSE has introduced a new S+ framework, click on the link for more -
What is ASD Margin for GSM and why is debited from the Ledger?
What is BSE's S+ framework?
Unable to buy GSM stocks
Not showing shares
GSM is an open cheating by exchanges on investors money. Brokers like Zerodha should support investors by opposing such stupid rules provided by exchanges. Tell us what happens to the money debited as additional security if the company goes bankruptcy?? At least in worst case exchange should give back the security amount if an investors sell the stock?? Exchanges and rules in India will only suck investors money and not real cheaters money… We obviously understand every stock in share market has risk before buy in cash and carry. Even if the company goes bankruptcy we will get maximum 100% loss(before this stupid rule). This stupid GSM making to loss 200% or 300%.
Atleast to protect clients. Either remove this scrip from selecting or show some kind of warning if the user selects to purchase.
Can Pledged shared be used to provide Additional Margin for GSM stocks?
Maha Rashtra Apex Corporation Limited MAHAPEXLTD INE843B01013
Nope, cannot be used.
This a GSM stage 3 stock. Can’t you guys do some searching instead of posting directly!??
When a stocks enters into GSM ,
Should we pay Additional Security Deposit for Stock purchases before a script enters into GSM also?
Additional security deposit is applicable only if the share sis in GSM category and many brokers do not entertain purchase orders in such scrip.
What happens if the stock is in our portfolio BEFORE entering into GSM category
should we pay additional security deposit
it is only applicable for fresh trades executed in the stock ?
ONLY for fresh trades that too only on purchase.