What are ASM & GSM lists?

Have you been in a situation where you were trading stock for the past few weeks using margins, and now you are not allowed to use margins? Or have you noticed a stock where the circuit filter has been locked at 5% - the trading stops at this level? 

In these cases, and other similar, the chances are that the stock in question has been put in ASM or GSM lists. Now, if you are hearing these terms for the first time, you must learn about them as you will come across stocks in these lists. You must know the impact in such cases. This article aims to provide you with a detailed understanding of ASM and GSM lists, their significance, and how they impact trading activities.

What is ASM?

Additional Surveillance Measures is a regulatory mechanism implemented by stock exchanges, such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), to closely monitor and control the trading activities of specific stocks. The Securities and Exchange Board of India (SEBI) introduced ASM to safeguard the market from excessive speculation, manipulation, and volatility associated with certain securities.

Stocks are included in the ASM list based on predefined criteria such as price movements, trading volumes, and other market parameters.

Companies with high levels of price volatility or abnormal trading volumes may be subjected to ASM.  

Types of ASM List

You will find two types of ASM as below:

• Long-Term ASM List
• Short-term ASM List

The stocks are put in one of the two ASM lists based on some criteria. For example, a High-Low Price Variation for three months is greater than or equal to (150% + Beta of the stock * Nifty 50 Variation). And, the concentration of the top 25 clients is greater than or equal to 30% of the combined trading volumes of NSE and BSE in the last 30 days. In such a case, the stock is put on the long-term ASM list. Within these two lists, the stock can be put in different stages.

ASM Impact on Trading

Stocks under ASM face additional scrutiny and restrictions. These measures may include higher margin requirements for trading and limitations on intraday trading positions. ASM stocks often witness increased surveillance and reporting requirements for market participants.

SEBI and the stock exchanges periodically review the ASM list to assess whether the securities should continue to be subject to additional surveillance. Stocks can be removed from the ASM list if they no longer meet the predefined criteria.

What should you do if your stock is on the ASM List?

The first thing you need to understand is that the stock is not on the ASM list because there is something wrong with the company or its fundamentals. ASM is only a mechanism to control the price movement to protect you and alert you to proceed with caution when it comes to the stocks in the ASM list.

What is GSM?

Graded Surveillance Measure is another regulatory tool aimed at ensuring market stability and protecting investors from abrupt price movements in specific stocks. Similar to ASM, GSM is implemented by stock exchanges under the guidance of SEBI. GSM categorizes securities into different levels (GSM Grades) based on their price movement and trading characteristics.

There are 6 stages of GSM, each with varying degrees of surveillance and restrictions. Here is the table with the details:

A quarterly review of securities (under Stages II & above of GSM) based on predefined objective criteria shall be carried out to assess the relaxation of surveillance action. If qualified, the applicable securities can be moved back from a higher stage to a lower stage in a sequential manner, say from Stage III to Stage II. 

How to check stocks on the GSM and ASM List?

You can check the list of stocks on the GSM and ASM lists on the NSE and BSE websites. 

The ASM list can be looked at:

• NSE: https://www.nseindia.com/reports/gsm
• BSE: Check this link

The GSM list is available on below links:

• NSE: https://www.nseindia.com/reports/gsm
• BSE: Check this link

What is the significance for investors?

• Risk Management: ASM and GSM lists serve as risk management tools, allowing investors to be cautious when dealing with securities under heightened surveillance. Investors can assess the risk associated with trading in ASM and GSM stocks and make informed decisions.
• Market Stability: These measures contribute to maintaining overall market stability by curbing excessive speculation and ensuring a fair and orderly trading environment.
• SEBI's Regulatory Oversight: ASM and GSM lists reflect SEBI's commitment to maintaining market integrity and protecting investor interests through proactive regulatory measures.

Before you go

Every investor must understand the implications of ASM and GSM lists. These regulatory measures are designed to promote fair and transparent trading practices, deter market manipulation, and safeguard the interests of investors. By staying informed about the stocks on these lists and the associated trading restrictions, you can enhance your risk management strategies and make more informed investment decisions in your financial journey.