What is ASM in the Stock Market? Meaning and ASM List

Trading in the stock market is full of risk and uncertainty. Volatility, manipulation and scams are other challenges traders experience while trading in the financial markets. In India, the regulatory body Securities and Exchange Board of India (SEBI) along with stock exchanges takes protective measures to monitor and regulate the trading activities to control such risks.

To enhance integrity and safeguard investors’ interests, SEBI introduced a market surveillance division in 1995. And to protect the investor’s funds and maintain the integrity of the market, SEBI introduced additional surveillance measures in 2018. SEBI with the help of the exchange identifies the list of highly volatile and risky stocks under ASM.

What is Additional Surveillance Measure?

Introduced by SEBI and the stock exchange, Additional surveillance measure or ASM is a kind of regulation system to monitor and regulate the various trading activities of particular securities. The main motive of ASM is to keep checking the price movement, trading volume, volatility and participants to protect the investors from unusual activities.

ASM helps to improve the market integrity while limiting the risk to protect the interest of the investors and enhancing their confidence level in trading in such securities. To include the stocks under the ASM, the stock exchange uses various parameters based on their price volatility, trading volume and market capitalization. A list of ASM securities is released by the exchange from time to time as per the market movement and securities come into the surveillance.

SEBI and Exchange jointly decide how to shortlist the securities in the ASM based on the objectives and criteria with the following parameters.

• High Low Variation
• Market Capitalization
• Volume Variation
• Delivery Percentage
• Client Concentration
• of Unique PANs
• Price to Earnings Ratio
• Close-to-Close Price Variation

Types of ASM used in the Market

The ASM is basically two types – short-term ASM and long-term ASM. In both types of ASM, the securities are included based on certain criteria like daily trading volume, implied volatility, trade margins concentration of client etc.

Short-Term and Long-Term ASM

Short-Term ASM List

The criteria to shortlist the stocks for short-term ASM is based on the short-term market trend and other conditions influencing the sentiment of the short-term traders. The stock categorized in this type of ASM is based on certain standards to apply the specific margin rates on such securities. And further stocks in this ASM are allocated into Stage 1 and Stage 2 with different margin rates applicability for each stage.

Stage 1: The securities in this stage are allowed to get one chance to clarify, and all the information of the stock regarding short-term ASM is presented on the website to keep investors updated about such information. Apart from this, the applicable margin rate is 1.5 times the current margin or 40% which is higher with the maximum margin capped at 100%.

Stage 2: The securities in this stage have a higher applicable margin rate of up to 2.5 times the existing margin or 80%, whichever is higher and the maximum margin is capped at 100%.

Long-Term ASM List

The stocks for long-term ASM need to fulfil certain criteria related to price fluctuation, client concentration, and other factors that are included in the long-term ASM list. There are various conditions in the long-term ASM like client concentration on the trading volume, market capitalization and corporate action adjusted-price variation.

Further, the securities for the long-term ASM are categorized into various stages with different significance.

How Long-term ASM is Applied?

The applicability of the long-term ASM can be understood with the various parameters listed below.

Selection of Securities: To select securities in this ASM, the factors considered are volatility in price, volume of trading and market capitalization. High trading volume securities are prone to manipulation and are usually included in the long-term ASM.

Longer Monitoring Period: Long-term ASM is applicable for an extended period until the stock exchange decides to lift or modify it based on the performance of the stock and the condition of the market.

More Strict Regulations: The securities under long-term ASM are scrutinised with stricter regulations like high margin requirements, increased disclosure obligations, and certain limitations on trading activities to ensure the controlled and stable trading in such securities.    

Integrity of the Market: The main objective of long-term ASM is to improve the integrity of the market through strict monitoring and regulatory measures. This helps to prevent manipulative activities, speculation and price alterations.

Mitigation of Risks: The long-term ASM imposes high restrictions that help mitigate risks for the investors and for the entire market. Risk mitigation is possible with stricter regulations to curb unusual price movement, especially in highly volatile market conditions.

Awareness among Investors: Investors trading in such securities need to be aware of the list of long-term ASM. Hence, investors need to keep checking the updated results of the list to identify the potential risks and define the trading strategies accordingly.

Regular Review: The securities included in the long-term ASM are periodically reviewed by the exchange to check the price movement, performance and behaviour of securities. Based on these reviews, the long-term ASM status is decided to continue, modify or lift.

STAGES IN THE ASM 

ASM Stages	Descriptions
Stage 1	Identification of securities eligible as per the predefined criteria like price change and trading volume.
Stage 2	Imposing regulatory measures like price bands, additional margin requirements and additional disclosures.
Stage 3	Further monitoring and review of identified securities to make sure compliance issues.
Stage 4	Lifting or modification of ASM based on the market condition and performance of the securities.
Stage 5	Further continuous monitoring and adjustments are required to maintain the stability in the market and ensure the investor’s protection.

How to Check the List of Securities under the ASM?

The stocks under the long-term and short-term ASM might change due to changes in the price, volume, market cap and other factors of the securities. Hence, you need to keep checking the list of the latest updated ASM on the website of the exchange. You can check the latest ASM report on NSE with a list of all updated securities.

How Does ASM Affect Investors?

ASM affects the investors in both ways – positively and negatively, depending on the market conditions. On the negative side, ASM securities face regulatory actions reducing the liquidity, increasing the transaction cost and high waring of risk in trading.

While on the positive side, it improves the market integrity with better risk mitigation while ensuring the protection of investor’s funds in the market.

Conclusion

The ASM is introduced by the SEBI and exchange to control the unusual activities in the trading of securities. It helps to protect the investors maintain the integrity of the market and minimize the risk. The ASM is applied by imposing certain restrictions on trading, margins and other activities of the participants.

The securities under the ASM list have an impact on the investor’s sentiments, trading patterns and stability in the market. Investors should keep themselves informed about the list of securities under ASM, as it can affect their trading strategy.

• Author: Religare Broking
• Last Updated: March 4, 2025