India: ASM Framework: A Value Added Check To Curb Volatility In Stock Market

Last Updated: 22 August 2018
Article by Kumar Deep


A number of measures and actions have been introduced by the Securities and Exchange Board of India (SEBI) in order to protect the investors of stock markets in India. These measures are in the nature of surveillance on working of the stock market, exchanges, market participants and companies. Various surveillance measures already implemented by SEBI and Stock Exchanges are including but not limited to reduction in price band, periodic call auction and transfer of securities to Trade for Trade category from time to time etc.

Further, in order to enhance market integrity and safeguard interest of investors, SEBI, in consultation with Stock Exchanges, has introduced Additional Surveillance Measures (ASM) to be implemented by the stock exchanges as tools for reconnaissance in addition to other existing surveillance measures already in force.

The ASM framework monitoring has come into force with effect from March 26, 2018. Initially the list under ASM comprised 36 stocks consisting both high beta scripts and scripts with low volume levels. But as per the latest updated list issued by SEBI and Exchanges, approximately 109 scripts are now covered under the ASM. Some of the stocks which are included in the list include: ABG Shipyard, Amtek Auto, Bhushan Steel, IVRCL, Jaypee Infratech, Monnet Ispat & Energy, Lanco Infratech, Orchid Pharma, Ruchi Soya Industries, Viceroy Hotels, etc.

Implementation of ASM

Under the ASM, the stocks are short listed for subjecting them to additional surveillance actions. The stocks are shortlisted based on market surveillance and such stocks are considered for the following surveillance actions by the stock exchanges:

  1. Securities shall be placed in Price Band of 5% (Profit and Loss) in one trading session to protect the interest of investors and to limit the loss for both investors and traders.
  1. Margins shall be levied at the rate of 100% on such stocks i.e. while investing in such stocks, the investor or trader would be required to pay full amount, as against the earlier provision, which allows investors to settle the trades even at a low margin level.
  1. The shortlisted securities shall be further monitored on a pre-determined objective criteria and would be moved into Trade for Trade segment.  The objective criteria is yet to be decided by SEBI and exchanges.
  1. Further, the shortlisted securities placed under the ASM would be reviewed on bimonthly basis (either twice a month or once in every two months).

Objective of ASM

The ASM has been introduced with the objective of checking any inorganic growth of stock prices in a short period without any corresponding and considerable changes in the financials of the company.

The main objectives of ASM may be listed as per below:

  1. To alert and advice investors to be extra cautious while dealing with securities covered under ASM.
  2. To advise market participants to carry out necessary due diligence while dealing in securities which are under the ASM ambit.

Parameters used by SEBI and Stock Exchanges for inclusion of stocks in ASM List:

As decided by SEBI and Stock Exchanges, the following parameters are considered for inclusion of stock in ASM list:

  1. High Low Variation
  2. Client Concentration
  3. No. of Price Band Hits
  4. Close to Close Price Variation
  5. PE ratio

The aforementioned criteria are dynamic in nature and subject to change from time to time and any such change will be duly notified by SEBI to investors.

Advantages of ASM to traders and investors:

Though the ASM has been introduced with the aim of protecting interests of investors, it will also benefit investors in the following manner:

  1. There would be limited profits or losses as the share prices of ASM shortlisted stocks cannot go up or down by more than 5%.
  1. The investor can keep an eye on these stocks now as due to the ASM framework, some of the stock prices have already started falling (some cases have fallen up to 14% in the last few days). Therefore, there is less scope for speculation in the market.
  1. The long term investors who do not believe in such short term fluctuations, may continue to invest in such stocks for long term benefits.

Therefore, ASM is a good measure for investors as the volatility in the stock prices of shortlisted scrips are being tracked by SEBI and stock exchanges, but it should also be noted that 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.1


As the name suggests, the ASMs are additional or enhanced measures to curb the volatility in the stock market and protect the investors' interest. India is one of the world's fastest growing economies and is one of the most prominent emerging markets for investors and traders. The ASM Framework is an additional tool to check market volatility and the Framework is without prejudice to the rights of SEBI and Stock Exchanges to take any other surveillance measures. In a nutshell, the ASM is expected to play an effective role in safeguarding the interest of investors, traders, exchanges and the market as a whole.



The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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