What is ASM In Stock Market

Listen to our Podcast: Grow your wealth and keep it secure.

0:00 / 0:00

ASM or “Additional Surveillance Measure” as they are also known, are a means to regulate and monitor the trading habits or activities of particular securities in detail. The primary aim of ASM is to help enhance stock market integrity, reduce the chances of risk, and above all, protect the interest of the investors.

The ASM is an initiative implemented by SEBI (Security Exchange Board of India). Under this provision, certain stocks are moved under ASM according to criteria under the National Stock Exchange (NSE).  These stocks are then divided into two categories; long-term ASM and short-term ASM.

For investors, it is important to know the ASM status of the stock they are planning to invest in before making a decision. 

Explore: ASM TECHNOLOGIES LTD

What is ASM in the Stock Market?

The stock market uses ASM to help identify stocks based on predetermined parameters. These parameters include aspects like price volatility, market capitalization and trade volumes. Once these stocks are identified, they are looked at with an even bigger lens. These stocks are subjected to stricter margin requirements, excellent monitoring, and increased disclosure duties as well. 

The main intention of the ASM is to ensure market stability and it does this by identifying and then blocking the stocks that are suspected to be indulging in price distortions or various manipulations. With ASM in place, market price swings and risks linked to certain stocks go down to a great extent, making the market a safer place for investors. 

Additional Read: Understanding ASM and GSM in Stock Trading | BSE & NSE

Different Types of ASM in the Stock Market 

There are quite a few ASM in the stock market. Here is a list of some of the most common ones that are used in the stock market. 

  • Price Bands: Price bands are the type of ASMs that place a pricing limit on stocks. This helps the stock market restrict the price of these stocks, thus keeping it within a particular range. 
  • Increased Margin Requirements: Within this type of ASM, higher margins are levied on certain stocks. This helps investors have a higher stake in that particular stock. As a result, there is a reduction in price manipulations and speculative activities. 
  • Trading Restrictions: Under this kind of ASM, stocks can have trading restrictions imposed on them. This in turn leads them to limit intraday trading or impose a minimum holding period amongst other things. 
  • GSM or Graded Surveillance Measure: In this type of ASM, stocks are categorised keeping their risk factors in mind. Based on the risk category of each stock/security, surveillance measures are taken for better monitoring.

What if Your Stocks End Up on the ASM List? 

As an investor, it can be hard to find your stocks under the ASM list. So here are a few steps you can follow to figure things out.

  • Research on why and how your stocks ended up on the ASM list
  • Assess any potential risks associated with the stock
  • Keep yourself updated on any kind of regulatory changes
  • With everything in mind, see if you can make any changes to your investment strategies

Conclusion

The stock market uses ASM to make it safer for investors at every turn by monitoring parameters like price volatility, market capitalization and trade volumes of certain securities. However, even with the safety net of the ASM at play, it is still crucial that investors do their homework when it comes to the kind of stocks they want to invest in.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

Share this article: 

Read More Blogs

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading

Bajaj Broking App Download

7.5 Lacs+ Users

icon-with-text

4.3+ App Rating

icon-with-text

4 Languages

icon-with-text

₹4300 Cr MTF Book

icon-with-text