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Risk Management Policy


Stocks Under GSM on BSE


Frequently Asked Questions

Questions on your mind? Dont worry we have the answers!

In the share market, GSM stands for Graded Surveillance Measure. It's a regulatory framework implemented by SEBI and BSE to monitor and regulate trading activities in specific securities.

In BSE, GSM stands for Graded Surveillance Measure. It's a system used by the Bombay Stock Exchange (BSE) to monitor and regulate trading activities in certain securities to ensure market integrity and investor protection.

GSM works by monitoring and regulating trading activities in specific securities based on pre-defined objective criteria. These criteria determine the stage of surveillance a security falls into, ranging from Stage I to Stage VI, each with its own set of surveillance actions. Actions include transferring stocks to the trade for trade segment, imposing price bands, and collecting Additional Surveillance Deposits (ASD) from buyers, with the aim of stabilizing the market and safeguarding investor interests.

Stocks are selected for inclusion in GSM based on pre-defined objective criteria. These criteria typically consider factors such as market capitalization, trading volume, price volatility, and financial health indicators. Securities that meet specific thresholds or show unusual trading patterns are shortlisted for GSM.
A stock stays in GSM until it meets the exit criteria or until the next quarterly review. The review is conducted every quarter, and stocks that no longer meet the inclusion criteria are moved out of GSM.

The stages in GSM range from Stage I to Stage VI:

  • Stage I: Transfer to trade for trade with a price band of 5% or lower.
  • Stage II: Trade for trade with a price band of 5% or lower and an Additional Surveillance Deposit (ASD) of 100% of trade value collected from buyers.
  • Stage III: Trading permitted once a week with an ASD of 100% of trade value deposited by buyers (Every Monday).
  • Stage IV: Trading permitted once a week with an ASD of 200% of trade value deposited by buyers (Every Monday).
  • Stage V: Trading permitted once a month with an ASD of 200% of trade value deposited by buyers (First Monday of the month).
  • Stage VI: Trading permitted once a month with no upward movement in price of the security, along with an ASD of 200% of trade value deposited by buyers (First Monday of the month).
Each stage imposes progressively stricter measures to curb excessive volatility and speculative trading in the securities under surveillance.

Stocks under GSM face progressively tighter restrictions as they move through stages, including trade for trade with limited price bands and additional deposits required from buyers. These measures are aimed at stabilizing the market and mitigating risks associated with speculative trading, ensuring investor protection and market integrity.

GSM impacts the stock price of a company by potentially reducing price volatility and liquidity due to tighter trading restrictions. It may also affect investor perception, leading to decreased investor confidence and potentially influencing the stock's demand and price.
The impact of GSM on the overall stock market is generally aimed at enhancing market stability and investor confidence. By regulating trading activities in specific securities, GSM helps prevent excessive speculation and volatility, which can contribute to a more stable and secure investment environment. However, it may temporarily reduce market liquidity and trading activity due to tighter restrictions, affecting overall market sentiment.

GSM is important for investors because it helps maintain market integrity and safeguards their interests. By regulating trading activities in specific securities, GSM reduces the risks associated with excessive speculation and price volatility. This ensures a more stable and secure investment environment, enhancing investor confidence and protecting their investments.

Buying GSM stocks comes with increased risks due to the tighter trading restrictions and potential price volatility associated with these securities. While GSM aims to stabilize the market, investors should conduct thorough research and consider the risks before investing in GSM stocks. It's essential to understand the implications of GSM on the stock's liquidity, trading restrictions, and potential impact on its price movement.

Investing in stocks under the GSM category carries several risks. These include reduced liquidity due to trading restrictions, potential price volatility, and increased trading costs. Additionally, there's a risk of decreased investor confidence and negative market perception, which could affect the stock's demand and price. It's crucial for investors to carefully assess these risks and consider their investment objectives before trading GSM stocks.

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