What ASM and GSM are

Some stocks move in ways the exchanges don’t like: a small company’s price doubling in weeks on little news, a handful of accounts doing most of the trading, a valuation wildly out of line with the business. Instead of halting such stocks, the exchanges put them on surveillance lists that make speculative trading slower and more expensive.

All of them are set up the same way: “SEBI and Exchanges, pursuant to discussions in joint surveillance meetings, have decided…” (NSE’s ASM, GSM and ESM pages). The exchanges publish the lists, and a stock moves between stages as they review it.

Framework In force since Aimed at Stages
GSM — Graded Surveillance Measure 14 March 2017 Stocks whose “price [is] not commensurate with financial health and fundamentals” I to IV
ASM — Additional Surveillance Measure 26 March 2018 Unusual price or volume behaviour: big high-low swings, client concentration, low delivery, few unique traders Long-term I to IV; short-term I and II
ESM — Enhanced Surveillance Measure 5 June 2023 Small companies with unusual moves; now all companies (main board and SME) under ₹1,000 crore market cap I and II

Dates from NSE’s FAQs: GSM FAQ v1.1, June 2026, ASM FAQ, August 2026, and circular NSE/SURV/56948, 2 June 2023 for ESM, which began with main-board companies under ₹500 crore and has since been widened.

The exchanges are explicit that this is not a verdict on the company: “The shortlisting of securities under ASM is purely on account of market surveillance and it should not be construed as an adverse action against the concerned company / entity” (ASM FAQ, Q4; the ESM FAQ says the same). The criteria change from time to time — GSM’s own FAQ notes changes agreed at a May 2026 meeting — so check the current FAQ rather than any summary, this one included.

The rules: what each stage changes

The tools are few and they stack:

  • Higher margin — up to 100%: you must put up the full trade value upfront, no leverage.
  • Narrower price band — down to 5% or 2% (the circuit limits post explains bands).
  • Trade-for-trade settlement — every trade must be settled by delivery; no buying and selling the same stock in a day to net off.
  • A deposit on top — GSM’s Additional Surveillance Deposit (ASD), paid in cash, interest-free, and not usable as margin for anything else.
  • Less frequent trading — at the later GSM stages, once a week.

GSM, stage by stage (GSM FAQ v1.1, Q4). Stage I sets a 100% margin; from Stage II trades are trade-for-trade, so the buyer pays in full, and the ASD comes on top:

Stage Paid upfront ASD (% of trade value) Trading Price band
Stage I 100% 0% Every day 5% or lower
Stage II 100% 50% Every day, trade-for-trade 5% or lower
Stage III 100% 100% Once a week (Monday), trade-for-trade 5% or lower
Stage IV 100% 100% Once a week (Monday), trade-for-trade 5% or lower, no upward movement

Long-term ASM steps up in a similar way: 100% margin at Stage I, a lower price band at each of Stages II and III, and gross settlement with a 5% band at Stage IV (ASM FAQ).

Worked example: a ₹1 lakh purchase in a GSM stock

Hypothetical. Imagine a small company on GSM. What does a buyer have to put up for ₹1,00,000 worth of shares at each stage?

Stage Paid upfront (₹) ASD (₹) Total locked up (₹)
Stage I 1,00,000 0 1,00,000
Stage II 1,00,000 50,000 1,50,000
Stage III 1,00,000 1,00,000 2,00,000
Stage IV 1,00,000 1,00,000 2,00,000
  1. At Stage I nothing is borrowed: ₹1,00,000 of shares needs ₹1,00,000 of cash.
  2. At Stage II the same purchase ties up ₹1,50,000: the price, plus a ₹50,000 deposit the exchange holds interest-free.
  3. At Stage III it’s ₹2,00,000, and you can only trade on one day a week. A position you want to exit on a Wednesday waits till Monday.
  4. With a 5% band, the most the position can move in a trading session is ₹5,000 — in either direction, and a locked lower circuit can repeat session after session.

For a company the size of our fictional Desi Bites (₹80 crore market cap), ESM is the framework in play: every company under ₹1,000 crore is in its universe, and a burst of unusual price moves could put it on the list. Being in the universe isn’t being on the list.

Common mistakes

  • Reading a surveillance tag as a fraud finding. For ASM and ESM the exchanges say outright it isn’t an adverse action against the company. It’s a flag on the trading, not a finding against the business.
  • Reading it as irrelevant. The flip side: the lists exist because the trading pattern looked unusual. A stock that’s run far ahead of its financials on thin volume is on GSM for a reason worth knowing.
  • Being surprised by the cash call. Moving from normal margin to 100%, plus an ASD at GSM Stage II, means an existing trading plan can suddenly need much more capital — and intraday strategies stop working under trade-for-trade.
  • Checking once. Stages change on each review. Look at the exchange’s current list (NSE publishes ASM and GSM reports) before trading a small stock, not a screenshot from last month.

Takeaway: ASM, GSM and ESM are the exchanges’ brakes on unusual trading in a stock — higher margins, narrower bands, delivery-only trades, and at the extreme, trading once a week. They flag the trading, not wrongdoing by the company, but they change what a trade costs and how easily you can get out.