Frequently Asked Questions (FAQs)

Stock surveillance is the monitoring of trading activities of stocks to prevent illegal practices such as insider trading and market manipulation. Regulators and stock exchanges use technology to detect suspicious trading activities and can take corrective action. The purpose is to ensure fair and transparent trading practices and protect investors from fraudulent activities, promoting a fair and trustworthy trading environment.

Additional Surveillance Measure (ASM) is a framework used by stock exchanges in India to monitor and regulate the trading of specific securities wherever exchange finds any surveillance concerns viz. Price variation, Volatility etc. Stocks that fall under ASM are subject to more stringent monitoring and reporting requirements to ensure that trading is fair and transparent, protecting investors from market abuse. The framework provides stock exchanges with a mechanism to identify and take corrective action against price manipulation or other irregularities. It helps maintain market integrity and promote investor confidence.

Graded Surveillance Measure (GSM) is a system used by the Indian stock exchanges to alert and advice investors to be extra cautious while dealing in the securities which witness an abnormal price rise not commensurate with financial health and fundamentals like Earnings, Book value, Fixed assets, Net-worth, P/E multiple, etc. Exchanges monitor the trading activity of securities and identify any unusual or suspicious trading behavior. Under GSM, securities are placed under different levels (called “stages”) of surveillance based on their trading activity. Securities with normal trading behavior are placed under lower levels of surveillance, while securities with abnormal or suspicious trading activity are placed under higher levels of surveillance. The GSM framework helps to monitor trading activity and take appropriate action if any unusual activity is detected. It is an important tool for maintaining market integrity and ensuring fair trading practices in the stock market.

Whether or not to trade in a stock that is under additional surveillance measure or graded surveillance measure depends on various factors, such as the reason for the surveillance, the extent of the restrictions, and the investor's own risk tolerance.

In general, these measures are put in place by the stock exchange to ensure that trading in the stock is conducted in a fair and orderly manner. This can include restrictions on trading volumes, price movements, or trading hours, among others.

Investors should carefully consider the potential risks and benefits of trading in a stock under these measures before making any decisions. It may be wise to consult with a financial advisor or do additional research to understand the specific requirements and restrictions that apply to the stock in question.

Ultimately, the decision to trade in a stock under additional surveillance measure or graded surveillance measure should be based on the individual investor's own analysis and risk appetite.

The Insolvency and Bankruptcy Code is a law that provides a framework for the resolution of insolvency and bankruptcy cases. Insolvency refers to the inability to pay debts when they are due, while bankruptcy is a legal process initiated when a person or entity is unable to pay off their debts.

A stock may be placed under surveillance for the Insolvency and Bankruptcy Code (IBC) if the company is facing financial distress, insolvency, or is unable to meet its financial obligations. The stock exchange places the stock under surveillance to monitor the trading activity and ensure that there is no market manipulation or insider trading. The stock may also be placed under surveillance if companies are undergoing Insolvency Resolution Process (IRP) as per Insolvency and Bankruptcy Code (IBC). In such cases, the stock exchange may take necessary measures to safeguard the interests of investors and the integrity of the market.

When a stock is under surveillance for the Insolvency and Bankruptcy Code (IBC), it means that the company is facing financial distress or insolvency issues. The stock exchange closely monitors the company's financial situation and trading activities to ensure that there is no market manipulation or insider trading. If the company fails to meet its obligations or improve its financial position, it may be delisted from the stock exchange, and the investors may lose their investments.

If a stock is under surveillance for insolvency and bankruptcy code, it means the company is going through insolvency proceedings. Trading may still be allowed, but there may beare restrictions as per surveillance stages such as suspended trading or limited price range. So, investors should check with their broker or financial advisor for details.

An inter-creditor agreement (ICA) is a legal agreement between creditors of a borrower that outlines their respective rights and obligations with respect to their debt holdings. It helps in coordinating and cooperating among creditors to achieve a resolution plan that is in the best interest of all parties involved, especially in the context of debt restructuring or insolvency resolution processes.

When a stock is under surveillance for inter-creditor agreement, it means that the company has entered into an agreement with its lenders to restructure its debt. In such cases, the stock may still be traded on the stock exchange, but there may be certain restrictions in place.

Typically, when a stock is under surveillance for inter-creditor agreement, trading in the stock may be suspended for a certain period of time. This is done to allow the company to complete its debt restructuring process and to ensure that all stakeholders are aware of the situation.

In some cases, there may be restrictions on the price at which the stock can be traded. For example, the stock may only be allowed to trade within a certain price range, or it may only be allowed to trade on certain days or at certain times. It is important to note that the specific rules and regulations around trading a stock under surveillance for inter-creditor agreement can vary. Investors who are interested in trading such a stock should consult with their broker or financial advisor for more information on the specific requirements and restrictions that apply.

Encumbrance refers to a legal claim or restriction on an asset that limits its transfer or use, such as a mortgage, lien, lease, or pending lawsuit. Encumbrances are recorded in public records and can affect the transfer of ownership or the ability to use the asset as collateral for another loan. Buyers and sellers should be aware of any encumbrances on an asset before making a transaction

Promoter encumbrance refers to the encumbrances on shares held by the promoters or major shareholders of the company. These encumbrances may be created to secure a loan or debt, and can limit the ability of the promoters to sell or transfer the shares. Promoter encumbrances are important to monitor as they can impact the overall control and ownership of the company.

Non-promoter encumbrance, on the other hand, refers to the encumbrances on shares held by entities or individuals who are not promoters or major shareholders of the company. These encumbrances may be created for various reasons such as collateral for a loan, or to secure a debt. Non-promoter encumbrances are also important to monitor as they can impact the overall shareholding structure of the company.

Both types of encumbrances can impact the trading of shares of a company and can affect the overall financial health of the company. It is important for investors to be aware of the nature and extent of any encumbrances on shares before investing in the company.

A stock may be under surveillance for high promoter encumbrance when the promoters have pledged a significant portion of their shares as collateral for loans or debts, which can create a potential risk for the company and its shareholders. When a stock is under surveillance for high promoter encumbrance, the stock exchange or regulator is monitoring the situation closely and may take action if necessary. Investors should carefully consider the potential risks and benefits of investing in such a stock and monitor any developments related to the encumbrance situation.

A stock may be put under surveillance for non-promoter encumbrance when entities or individuals who are not promoters have pledged a significant portion of their shares as collateral for loans or debts, which can create potential risks for the company and its shareholders. When a stock is under surveillance for non-promoter encumbrance, the stock exchange or regulator is monitoring the situation closely and may take action if necessary. Investors should carefully consider the potential risks and benefits of investing in such a stock and monitor any developments related to the encumbrance situation.

Trading in a stock under surveillance for high promoter encumbrance or non-promoter encumbrance can be risky, as there may be potential implications on the financial health and prospects of the company. It is important for investors to carefully consider the potential risks and benefits of investing in such stocks and to conduct thorough research and analysis before making any investment decisions.

Investors should monitor any developments related to the encumbrance situation and assess how it may impact the company's financial health and overall prospects. It is also important to understand the reasons for the encumbrance and whether it is a temporary or long-term situation.

Ultimately, the decision to trade in a stock under surveillance for high promoter encumbrance or non-promoter encumbrance should be based on an investor's individual risk tolerance and investment objectives. If an investor decides to trade in such a stock, they should do so with caution and consider implementing risk management strategies such as setting stop-loss orders.

A stock may be placed under surveillance for information list (unsolicited SMS) when there are reports of unsolicited SMS messages being sent to investors with information about the company or its stock, without their consent or request. These messages may contain false or misleading information, which can potentially manipulate the stock price and mislead investors.

The stock exchange or regulator may place the stock under surveillance to investigate the source of these unsolicited SMS messages and to ensure that investors are not being misled or harmed. The surveillance may also be used to monitor trading activity in the stock and to detect any potential market manipulation.

Investors should be cautious when receiving unsolicited SMS messages related to stock trading and should conduct their own research and analysis before making any investment decisions. They should also report any suspicious messages to the relevant authorities to help prevent market manipulation and protect the interests of investors.

Exchange also uploads a Current Watch list for the scrips which are in the surveillance due to circulation of unsolicited messages.

Refer the link for the list: -

https://www.nseindia.com/regulations/unsolicited-messages-report

A stock may be placed under surveillance for unsolicited video when there are reports of unsolicited videos being circulated that contain false or misleading information about the company or its stock. These videos can potentially manipulate the stock price and mislead investors.

The stock exchange or regulator may place the stock under surveillance to investigate the source of these videos and to ensure that investors are not being misled or harmed. The surveillance may also be used to monitor trading activity in the stock and to detect any potential market manipulation.

Investors should be cautious when receiving unsolicited videos related to stock trading and should conduct their own research and analysis before making any investment decisions. They should also report any suspicious videos to the relevant authorities to help prevent market manipulation and protect the interests of investors.