Stock markets are designed to reward informed investing\u2014but they also need safeguards to prevent excessive speculation and abnormal price movements. That\u2019s where the Additional Surveillance Mechanism (ASM)<\/strong> comes in.<\/p>\n Let\u2019s break it down in a simple, practical way so you can understand how it impacts your trades and investments.<\/p>\n The Additional Surveillance Mechanism (ASM)<\/strong> is a regulatory framework introduced by Indian stock exchanges like the National Stock Exchange (NSE) and BSE Limited (BSE), in coordination with the Securities and Exchange Board of India (SEBI).<\/p>\n Its primary purpose is to curb excessive volatility and protect investors<\/strong> from abnormal price movements that may not be backed by fundamentals.<\/p>\n When a stock is placed under ASM, it doesn\u2019t stop trading\u2014but it becomes subject to stricter trading rules.<\/p>\n Stocks are typically moved under ASM when exchanges detect unusual activity such as:<\/p>\n The goal is simple: reduce market manipulation risks and protect retail investors from potential traps.<\/strong><\/p>\n Exchanges rely on a mix of quantitative and behavioral indicators before placing a stock under ASM:<\/p>\n These parameters help identify whether a stock is being driven by speculation rather than fundamentals.<\/p>\n ASM is broadly classified into two categories:<\/p>\n When a stock is placed under ASM, several trading restrictions may apply:<\/p>\n These measures aim to cool down excessive trading activity<\/strong>.<\/p>\n Here\u2019s a quick snapshot of the impact:<\/p>\nWhat is ASM?<\/h2>\n
Why Do Exchanges Place Stocks Under ASM?<\/h2>\n
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Parameters Considered Under ASM<\/h2>\n
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Short-Term ASM vs Long-Term ASM<\/h2>\n
1. Short-Term ASM (ST-ASM)<\/h3>\n
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2. Long-Term ASM (LT-ASM)<\/h3>\n
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What Happens When a Stock Comes Under ASM?<\/h2>\n
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How ASM Affects Intraday, Leverage, Margins, and Settlement<\/h2>\n