SME stocks: BSE, NSE announce short-term ASM, trade for trade settlement

Stock exchanges BSE and NSE have announced short-term additional surveillance measure (ASM) and Trade for trade (TFT) settlement framework for the Small and Medium Enterprises (SME) segment in a bid to curb speculative trading and enhance market integrity, safeguarding investor interest. The TFT and short term ASM framework for SME stocks would be made available on exchanges from October 3.

On Tuesday, a total of 26 SME stocks on NSE platform advanced against a fall seen on 102 stocks. A total of 71 SME stocks were unchanged. In the case of BSE, 66 SME stocks were down, 29 up and six unchanged. The BSE SME platform has seen 454 SME listings with a total market capitalisation of Rs 85,048.47 crore. Out of them, 179 SME stocks have migrated to mainboard.

"Sebi has levied ASM on SME stocks as at times these are susceptible to price rigging due to low volumes/liquidity. The circular from exchange calls for ASM in any SME script if price moves 25 per cent in 5 trading days or few clients are dominating trading in that particular script. In such a scenario exchange may levy upto 100 per cent margin in such scripts for trading and will seek clarity from the company wrt any corporate announcements which may be behind the price movement," said SAS Online, a deep discount brokerage platform.

The discount brokerage said: A lot of times the pump-and-dump strategy is used to manipulate investors in these scripts. Regulatory measures will help bring about stability in price movement of these stocks."

In two separate circulars, the exchanges said the Trade for Trade (TFT) framework will be extended to SME stocks "subject to certain changes."  Market participants may note that TFT framework, BSE said, would be in conjunction with all other prevailing surveillance measures being imposed by the exchanges from time to time.

"Further, it may also be noted that the shortlisting of securities under TFT is purely on account of market surveillance, and it should not be construed as an adverse action against the concerned company/entity," BSE said in a release.

Market veteran Shyam Sekhar, Chief Ideator at advisory firm ithought in a tweet on X (formally twitter said: "The clean up of the SME space has not even begun. And, its ripple effect will be felt in other parts of the market too. What happened in the SME market will eventually badly affect all stakeholders. The corporate governance will be a shocker for everyone."

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