Definition
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.
GSM places suspect stocks, typically those with high valuations unsupported by fundamentals, into stages from I to higher levels. Restrictions escalate from a trade-to-trade requirement and additional margin to periodic call auction trading and even periodic, infrequent trading windows with 100% margin and price caps.
The staged design warns investors and progressively curbs speculation as concerns deepen. GSM complements the ESM framework, which focuses on small-caps by market cap; together they form the exchanges' surveillance ladder to deter manipulation and protect investors in vulnerable scrips.
Related terms
- 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.
- 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.