Small Companies Under ₹1,000 Crore Market Cap to Face Stricter Trading Rules Starting August 13
Starting August 13, stock exchanges will expand the enhanced surveillance measure (ESM) framework to include more companies. Previously, this framework only applied to companies with a market capitalisation of less than ₹500 crore. Now, it will include companies with a market cap of up to ₹1,000 crore.
The ESM framework was introduced in June last year to control the volatility in smallcap stocks. On Friday, BSE and NSE announced that, after a meeting with SEBI, they would extend the ESM rules to companies with a market cap below ₹1,000 crore.
Under this framework, companies in Stage 1 will be traded with a trade-for-trade mechanism and a price band of 5% or 2%. In Stage II, the price band will be 2%, and trading will still be under the trade-for-trade mechanism. The criteria for selecting these companies include variations in the high-low prices and close-to-close price changes.
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