The Long-term Additional Surveillance Measure (LT ASM) is a regulatory framework introduced by SEBI and Indian stock exchanges to monitor and manage risks in stocks that exhibit continuous abnormal trading patterns. This framework is designed to protect investors and enhance market integrity by imposing stricter trading conditions on selected securities for an extended period.
Criteria for Inclusion in LT ASM
Stocks are selected for the Long-term Additional Surveillance Measure (LT ASM) list based on objective criteria jointly defined by SEBI and the exchanges. These criteria include significant price swings (high-low and close-to-close variations over defined periods), abnormal trading volume fluctuations, high client concentration (such as the top 25 clients accounting for a large share of volume), differentiated market capitalization thresholds, low diversity among traders (few unique PANs), low delivery percentage, and extremely high or volatile price-earnings (PE) ratios.
Stages of LT ASM
LT ASM (Long-Term Additional Surveillance Measure) is applied in steps. As a stock moves through each step, trading restrictions become stricter to help control unusual price movements or speculation.
- Stage I: 100% margin requirement from T+3 day; price band may be reduced.
- Stage II: Further reduction in price band; continued 100% margin.
- Stage III: Additional price band reduction; continued 100% margin.
- Stage IV: Settlement on a gross basis (trade-to-trade), 100% margin, and a restrictive price band (e.g., 5%). For derivative stocks, new contracts are not issued, and existing contracts are settled as per expiry.
Here is the list of stocks that have been excluded from the LT-ASM Framework:
Carraro India Ltd
Carraro India Ltd is a technology-driven company that designs, develops, and manufactures engineered transmission systems and axles, primarily serving original equipment manufacturers (OEMs) of agricultural tractors and construction equipment. On July 18th, Carraro India Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Tanvi Foods (India) Ltd
Tanvi Foods (India) Ltd is an Indian company that specializes in the manufacturing and trading of fresh and processed agricultural products, frozen snacks, and traditional regional frozen foods, and they are particularly known for their sweet corn-based products. On July 18th, Tanvi Foods (India) Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Sky Gold and Diamonds Ltd
Sky Gold and Diamonds Ltd is an Indian company that designs, manufactures, and markets gold jewelry. They primarily deal in 22-karat gold jewelry, offering a diverse range of designs to cater to different customer preferences and regional tastes. On July 18th, Sky Gold and Diamonds Ltd was excluded from the LT-ASM Framework by the stock exchanges.
N K Industries Ltd
N.K. Industries Ltd. (NSE: NKIND) is an Indian company primarily engaged in the manufacturing and export of castor oil and its derivatives. It specializes in a range of castor oil products and derivatives, including hydrogenated castor oil (HCO) and 12-Hydroxystearic acid (12-HSA). On July 18th, N K Industries Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Criteria for Exclusion from LT ASM
A stock may be considered for exit from the LT ASM framework if it no longer meets the inclusion criteria. The process is as follows:
- Stage-wise review: Stocks are reviewed on a weekly basis while under LT ASM.
- Minimum period: Stocks must complete a minimum period in the LT ASM framework (e.g., 60 or 90 calendar days, depending on the exchange and specific rules) before becoming eligible for exit.
- Performance assessment: If, during the review, the stock does not exhibit the abnormal characteristics that led to its inclusion, it may be moved out of LT ASM in a staged manner.
- Derivative contracts: For stocks in Stage IV, new derivative contracts are not issued until the stock exits the LT ASM framework, and existing contracts are settled as per expiry.
Written by Sridhar J
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