In the world of finance, there are countless acronyms that can be confusing for those who are not familiar with the industry. One of these acronyms is ASM, which stands for Additional Surveillance Measure. In this article, we will dive deep into ASM in the context of the stock market, discussing its meaning, purpose, and implications & ASM full form.
What is ASM in the Stock Market?
Additional Surveillance Measure (ASM) is a mechanism that is put in place by stock exchanges to monitor the price and trading activities of certain securities. ASM is essentially a tool that helps to identify stocks that are exhibiting unusual price behavior, abnormal trading volumes, or other suspicious activities.
When a stock is put under ASM, it means that the exchange has flagged it as a high-risk security that requires closer monitoring. The exchange may impose certain restrictions on trading in these securities, or it may require additional disclosures from the company in question.
The primary purpose of ASM is to protect the interests of investors by ensuring that they are trading in securities that are fairly priced and have a reasonable level of liquidity. ASM is particularly important in emerging markets, where the risk of fraud and market manipulation is higher than in more developed markets.
Why is ASM Important?
ASM is an important tool for stock exchanges because it helps to maintain the integrity of the market. By identifying and flagging securities that are exhibiting unusual price behavior, the exchange can take steps to prevent fraud, manipulation, and other types of misconduct.
For example, if a stock is experiencing a sudden surge in price or trading volume, this could be a sign that insider trading or market manipulation is taking place. By flagging the stock for additional surveillance, the exchange can investigate the situation and take action if necessary.
ASM is also important for investors because it provides an additional layer of protection against fraud and misconduct. By monitoring the activities of high-risk securities, investors can be more confident that they are trading in a fair and transparent market.
How does ASM Work?
ASM is typically implemented by stock exchanges in emerging markets or in markets where there is a higher risk of fraud or misconduct. When a security is flagged for ASM, the exchange may impose certain restrictions on trading in that security or require additional disclosures from the company.
The specific requirements of ASM can vary depending on the exchange and the circumstances of the security in question. For example, the exchange may require the company to provide additional financial disclosures or to appoint an independent auditor to monitor its activities.
In some cases, the exchange may require trading in the security to be halted until the situation has been resolved. This can help to prevent further market manipulation and ensure that investors are not trading in a security that is overpriced or undervalued.
The process of putting a security under ASM can be initiated by the exchange or by regulatory authorities. If the exchange or regulator identifies a security that is exhibiting unusual behavior, they may request that it be put under ASM for closer monitoring.
Once a security is under ASM, it will remain there until the exchange or regulator is satisfied that the situation has been resolved. This can involve a thorough investigation into the company’s activities, or it may simply require a period of time for the market to adjust to new information or circumstances.
Benefits of ASM
The implementation of Advance Surveillance Measures (ASM) provides several benefits to the stock market, traders, and investors. Some of the key benefits of ASM are:
- Improved market integrity: ASM helps to maintain market integrity by monitoring trading activities and placing restrictions on securities that are deemed to be at risk of market manipulation. This can help prevent fraudulent activities and insider trading, ensuring that the market remains fair and transparent for all participants.
- Enhanced investor protection: ASM helps to protect investors by reducing the risk of market manipulation and ensuring that securities are traded at fair prices. This can help build investor confidence in the market and encourage greater participation.
- Increased market efficiency: ASM can help improve market efficiency by reducing the impact of market manipulation on prices and ensuring that trading activities are conducted in an orderly manner. This can help reduce volatility and improve liquidity in the market.
- Timely detection of potential market manipulation: ASM helps to detect potential market manipulation in a timely manner, allowing regulators to take appropriate action to prevent further harm to investors and the market as a whole.
- Reduced regulatory burden: ASM can help reduce the regulatory burden on market regulators by allowing them to focus on securities that are deemed to be at risk of market manipulation, rather than having to monitor all securities on a continuous basis.
Overall, the implementation of ASM provides several benefits to the stock market, traders, and investors, by improving market integrity, enhancing investor protection, increasing market efficiency, enabling timely detection of potential market manipulation, and reducing the regulatory burden on market regulators.
What are the Implications of ASM?
ASM can have significant implications for both companies and investors. For companies, being put under ASM can be a sign that the market has lost confidence in their ability to operate in a fair and transparent manner. This can lead to a decline in the company’s share price and make it more difficult for them to raise capital in the future.
In addition, being put under ASM can require companies to devote additional resources to compliance and monitoring activities. This can be a significant burden for smaller companies, which may not have the same resources as larger firms.
For investors, ASM can provide valuable information about the health of a particular security. If a stock is put under ASM, it may indicate that there are potential risks associated with investing in that security.
Investors should take this information into account when making investment decisions and may choose to avoid investing in that security until the situation has been resolved.
ASM can also impact the liquidity of a security. When a security is put under ASM, the exchange may impose restrictions on trading in that security, which can limit the number of buyers and sellers in the market. This can make it more difficult for investors to buy or sell the security, which can impact its price.
Overall, ASM is an important tool for maintaining the integrity of the stock market and protecting the interests of investors. While it can have significant implications for companies and investors, it is an important mechanism for identifying and addressing potential risks and ensuring that the market remains fair and transparent.
ASM in India
In India, the Securities and Exchange Board of India (SEBI) is responsible for regulating the securities market and implementing ASM. SEBI introduced ASM in 2007 to address concerns about market manipulation and insider trading.
Under ASM, SEBI can impose additional surveillance on securities that are identified as high-risk. When a security is put under ASM, the exchange must disclose this information to the public and take certain steps to monitor trading in that security.
The specific requirements of ASM in India can vary depending on the circumstances of the security in question. In some cases, SEBI may require the company to provide additional financial disclosures or appoint an independent auditor to monitor its activities.
SEBI can also impose trading restrictions on securities that are under ASM. For example, it may require that trading in the security be limited to a certain percentage of the average daily trading volume or that there be a cooling-off period between trades.
ASM in India has been successful in identifying and addressing potential risks in the market. However, it has also been criticized for its impact on liquidity and the additional burden it places on companies.
ASM full form in different Indian languages
Here’s a table with the full form of ASM (Advance Surveillance Measures) in different Indian languages:
| Language | Translation |
|---|---|
| English | Additional Surveillance Measure |
| Hindi | अतिरिक्त निगरानी उपाय |
| Bengali | অতিরিক্ত নজরদারি ব্যবস্থা |
| Tamil | கூடுதல் கண்காணிப்பு முறை |
| Telugu | అదనపు నిగాణన నమూనా |
| Marathi | अतिरिक्त सतर्कता उपाय |
| Gujarati | અતિરિક્ત નિગરાની ઉપાય |
| Kannada | ಅಧಿಕಾರಿಕ ನಿಗೂಢ ನಿರೀಕ್ಷಣ |
| Malayalam | അധിക കണ്ണാടിപ്പ് ചട്ടം |
| Punjabi | ਵਾਧੇਰੇ ਨਿਗਰਾਨੀ ਉਪਾਧੀ |
| Urdu | اضافی نگرانی اقدام |
Note: The transliteration of the full form of ASM may vary slightly in different regions and dialects of the languages listed above.
Criteria for ASM
The shortlisting of securities for placing in ASM is based on an objective criterion as jointly decided by SEBI and Exchanges covering the following parameters:
- High Low Variation
- Client Concentration
- Close to Close Price Variation
- Market Capitalization
- Volume Variation
- Delivery Percentage
- No. of Unique PANs
- PE
In the context of the stock market, ASM stands for “Advance Surveillance Measures” and refers to a set of regulations and measures implemented by stock exchanges to monitor the trading activities of market participants and maintain market integrity.
The criteria for ASM may vary depending on the specific rules and regulations of each stock exchange, but generally include the following:
- Trading volumes: One of the key criteria for ASM is trading volumes. The stock exchange monitors the trading volumes of individual securities and may implement ASM if it observes abnormally high trading volumes. This is because high trading volumes may indicate that a particular stock is being manipulated or that insider trading is taking place.
- Price movements: Another criterion for ASM is price movements. If a stock price is showing significant fluctuations or volatility, the stock exchange may impose ASM. This is because such price movements may indicate that the stock is being manipulated or that there is a sudden surge in demand or supply.
- Concentrated positions: ASM may also be implemented if there are concentrated positions in a particular stock or group of stocks. Concentrated positions refer to a situation where a few market participants hold a large number of shares in a particular stock. This can create market manipulation opportunities and can affect the market’s overall liquidity.
- Delivery volumes: Another criterion for ASM is delivery volumes. Delivery volumes refer to the number of shares that are actually delivered to the buyers on the settlement date. If there is a significant difference between the delivery volumes and the trading volumes, the stock exchange may implement ASM. This is because such discrepancies may indicate that the market is being manipulated.
- Price-to-earnings ratios: ASM may also be imposed if the price-to-earnings (P/E) ratios of a particular stock or group of stocks are unusually high. P/E ratios refer to the ratio of a company’s share price to its earnings per share. High P/E ratios may indicate that the market is overvaluing the stock, which can lead to market manipulation.
- Market capitalization: ASM may also be implemented if the market capitalization of a particular stock or group of stocks is very low or very high compared to the average market capitalization of the exchange. This can indicate that the market is not properly valuing the stock, which can create opportunities for market manipulation.
ASM is a set of regulations and measures implemented by stock exchanges to maintain market integrity and prevent market manipulation. The criteria for ASM may include trading volumes, price movements, concentrated positions, delivery volumes, P/E ratios, and market capitalization. These criteria are designed to detect unusual trading activity and maintain a fair and orderly market.
ASM restrictions on Security
ASM, which stands for “Advance Surveillance Measures,” is a regulatory framework that is implemented by stock exchanges to monitor the trading activities of market participants and maintain market integrity.
When ASM is imposed on a security, certain restrictions are placed on its trading activity. These restrictions may vary depending on the specific rules and regulations of each stock exchange, but generally include the following:
- Price bands: One of the key restrictions imposed by ASM is price bands. Price bands refer to the upper and lower limits within which a security can be traded in a particular trading session. When ASM is imposed on a security, the stock exchange may set narrower price bands than usual to prevent any sudden, abnormal price movements. This means that traders will only be able to buy or sell the security within the specified price bands.
- Additional margin requirements: Another restriction that may be imposed by ASM is additional margin requirements. When ASM is implemented, the stock exchange may require market participants to deposit additional margins to trade the security. This is to ensure that traders have enough financial resources to cover any potential losses resulting from the restricted trading activity.
- Short selling restrictions: ASM may also impose restrictions on short selling, which is a trading strategy where traders borrow shares and sell them, hoping to buy them back at a lower price to make a profit. When ASM is imposed, the stock exchange may prohibit short selling of the security to prevent traders from manipulating the market.
- Reduced position limits: ASM may also reduce the position limits on a security. Position limits refer to the maximum number of shares that a trader can hold in a particular security. When ASM is imposed, the stock exchange may reduce the position limits to prevent any single trader from holding a large number of shares and manipulating the market.
- Increase in surveillance: When ASM is implemented on a security, the stock exchange may increase its surveillance of the trading activity in that security. This includes monitoring the trading volumes, price movements, and other key indicators to detect any unusual trading activity that could indicate market manipulation.
When ASM is imposed on a security, restrictions are placed on its trading activity to maintain market integrity and prevent market manipulation. These restrictions may include price bands, additional margin requirements, short selling restrictions, reduced position limits, and increased surveillance. The goal of these restrictions is to ensure a fair and orderly market for all market participants.
Check ASM status of the security
Here is the direct link to check securities under ASM list. This list keeps on updating every day based on the various criteria set by SEBI.
https://www.nseindia.com/reports/asm
To check the ASM status of a security, you can follow these steps:
- Go to the website of the stock exchange where the security is listed. For example, if the security is listed on the National Stock Exchange of India (NSE), go to the NSE website.
- Look for the section on the website that provides information on the securities that are under ASM. This section may be called “Surveillance” or “Market Watch.”
- Enter the symbol or name of the security you want to check in the search bar provided.
- The search results will display the current status of the security. If the security is under ASM, the status will be displayed along with the reason for the imposition of ASM.
- If the security is not under ASM, the search results will display its current trading status and other relevant information.
It is important to note that ASM status can change frequently based on the criteria mentioned in our previous response. Therefore, it is important to regularly check the status of securities that you are interested in trading to ensure that you are aware of any restrictions that may be in place.
FAQs on ASM
ASM stands for “Advance Surveillance Measures.” It is a regulatory framework that is implemented by stock exchanges to monitor the trading activities of market participants and maintain market integrity.
The criteria for imposing ASM on a security may vary depending on the specific rules and regulations of each stock exchange, but generally include factors such as trading volumes, price movements, and other key indicators that may indicate unusual trading activity or market manipulation.
When ASM is imposed on a security, restrictions are placed on its trading activity, which may include price bands, additional margin requirements, short selling restrictions, reduced position limits, and increased surveillance.
To check the ASM status of a security, you can go to the website of the stock exchange where the security is listed and look for the section that provides information on the securities that are under ASM. Enter the symbol or name of the security you want to check in the search bar provided, and the search results will display its current ASM status.
Yes, you can still trade a security that is under ASM, but you will need to follow the restrictions that are placed on its trading activity, such as price bands, additional margin requirements, and reduced position limits.
The duration of ASM can vary depending on the specific rules and regulations of each stock exchange and the reason for its imposition. ASM may remain in place for a few days, weeks, or even months, depending on the market conditions and other factors.
The purpose of ASM is to maintain market integrity and prevent market manipulation by monitoring the trading activities of market participants and placing restrictions on the trading activity of securities that are deemed to be at risk of market manipulation.
No, ASM is typically imposed on securities that are deemed to be at risk of market manipulation based on specific criteria such as trading volumes, price movements, and other key indicators. Not all securities are subject to ASM.
Here is the complete document on the FAQs on ASM.
Conclusion
In conclusion, ASM, which stands for “Advance Surveillance Measures,” is a regulatory framework that is implemented by stock exchanges to monitor the trading activities of market participants and maintain market integrity. The criteria for imposing ASM on a security may vary depending on the specific rules and regulations of each stock exchange, but generally include factors such as trading volumes, price movements, and other key indicators that may indicate unusual trading activity or market manipulation.
When ASM is imposed on a security, restrictions are placed on its trading activity, which may include price bands, additional margin requirements, short selling restrictions, reduced position limits, and increased surveillance. These restrictions are designed to prevent market manipulation and maintain market integrity.
Traders and investors can still trade a security that is under ASM, but they will need to follow the restrictions that are placed on its trading activity. It is important to regularly check the ASM status of securities that you are interested in trading to ensure that you are aware of any restrictions that may be in place.
ASM is an important tool for maintaining market integrity and preventing market manipulation. By monitoring trading activities and placing restrictions on securities that are deemed to be at risk of market manipulation, stock exchanges can help ensure that markets are fair and transparent for all participants.