Definition
Enhanced Surveillance Measure (ESM)
The Enhanced Surveillance Measure is a SEBI/exchange framework that places small-cap and micro-cap securities showing unusual price-volume behaviour under additional surveillance to curb excessive speculation.
ESM targets low-market-cap stocks that exhibit sharp, unexplained price moves, applying restrictions such as a periodic call auction mechanism, a tighter price band and 100% margin. The aim is to protect retail investors from pump-and-dump activity in illiquid micro-caps.
ESM works alongside the GSM and trade-to-trade frameworks as part of the exchanges' graded surveillance toolkit. A stock can move through ESM stages based on continued abnormal behaviour, and the measures are reviewed periodically, with the security exiting once activity normalises.
Related terms
- Graded Surveillance Measure (GSM)The Graded Surveillance Measure is a SEBI/exchange framework that imposes escalating restrictions on securities with weak fundamentals or abnormal price behaviour, moving them through stages of increasing severity.
- Trade-to-Trade (T2T) SegmentThe trade-to-trade segment requires that every transaction in a listed security result in compulsory delivery, prohibiting intraday netting or speculation in that stock.
- Periodic Call AuctionA periodic call auction is a trading mechanism for illiquid securities in which orders are batched and matched at a single price in short, repeated auction sessions through the day instead of continuous trading.
- Price BandA price band is the maximum permissible price movement, expressed as a percentage above and below a reference price, within which a security may trade during a session before being frozen.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.