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 persistent 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.
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.
Here is the list of stocks that have been excluded from the LT-ASM Framework:
One Mobikwik Systems Ltd
One MobiKwik Systems Ltd is a pioneering Indian fintech firm revolutionizing digital payments and financial services through its comprehensive platform. Beyond just a digital wallet, MobiKwik offers a broad ecosystem including UPI payments, buy-now-pay-later options, and instant credit solutions. On June 20th, One Mobikwik Systems Ltd was excluded from the LT-ASM Framework by the stock exchanges.
PG Electroplast Ltd
PG Electroplast Ltd (PGEL) is a leading Indian Electronics Manufacturing Services (EMS) provider. It specializes in OEM (Original Equipment Manufacturing), ODM (Original Design Manufacturing), and plastic injection molding, catering to both Indian and global consumer-durables brands. On June 20th, PG Electroplast Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Senco Gold Ltd
Senco Gold Ltd is a leading jewelry retailer in India, offering gold, diamond, and other precious metal jewelry across its extensive retail network. They operate both physical stores and online platforms, catering to a wide range of customer segments. On June 20th, Senco Gold Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Shakti Pumps (India) Ltd
Shakti Pumps (India) Ltd is a leading manufacturer of energy-efficient pumps and motors, serving agricultural, industrial, and domestic sectors in India. The company is recognized for its focus on innovation and quality in pump technology. On June 20th, Shakti Pumps Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Suven Life Science Ltd
Suven Life Science Ltd is a pharmaceutical and biotechnology company specializing in drug discovery and contract research services. It focuses on developing novel therapeutics for central nervous system disorders and collaborates with global pharmaceutical firms. On June 20th, Suven Life Science Ltd was excluded from the LT-ASM Framework by the stock exchanges.
Written by Sridhar J
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