Additional Surveillance Measure (ASM)
A SEBI-driven framework that places higher margin requirements on stocks showing abnormal price movements, volume concentration, or volatility spikes, without restricting when they can be traded.
Definition
Additional Surveillance Measure (ASM) is a joint framework maintained by SEBI, NSE, and BSE that identifies stocks exhibiting potentially manipulative trading characteristics — such as abnormal price rises, unusual volume surges, high client concentration, or significant deviation from sector peers — and subjects them to enhanced margin requirements. Unlike the more severe Graded Surveillance Measure (GSM), ASM does not restrict trading frequency or mandate trade-to-trade settlement; instead, it raises the cost of carrying positions in the flagged stocks to deter speculative activity and protect retail participants. ASM operates in two tiers: Short-term ASM (ST-ASM) and Long-term ASM (LT-ASM).
Why it matters
For active traders, an ASM designation is a direct capital efficiency hit. When a stock enters ASM Tier 1, the exchange mandates a 50% margin on both buy and sell positions; at Tier 2 (Long-term ASM), this rises to 100%. These requirements are in addition to the normal VaR and extreme loss margins, which means a stock with a standard 15% VaR margin suddenly requires 65% or more of its notional value to be set aside as initial margin.
Any stock that enters the ASM framework and is already in the F&O segment can create cross-segment complications. Margin requirements on the stock's futures and options may also be raised in tandem, and if the stock's fundamentals deteriorate further, exchanges can restrict it from the F&O segment altogether. Traders running delta-neutral strategies with stock futures need to monitor ASM lists closely since a sudden margin hike can result in a margin call without any change in the underlying position.
ASM placements are reviewed periodically by the exchanges. A stock exits ASM when it no longer meets the trigger criteria over the evaluation period — typically after sustained improvement in price behaviour and broader participation replacing concentrated client activity.
How it works
Exchanges evaluate all listed securities against a basket of parameters on a rolling basis. Trigger criteria for Short-term ASM include: price appreciation above a defined threshold over recent weeks, high volatility relative to peers, elevated delivery percentage (indicating cornering), and close-to-close price variation. Stocks meeting multiple criteria are placed on the ST-ASM list. If the stock remains on the list after subsequent reviews without improvement, it may migrate to LT-ASM with the higher 100% margin. Both NSE and BSE publish updated ASM lists on their websites, and brokers typically send alerts to affected clients.
Example
Suppose a hypothetical mid-cap stock on NSE rises 80% over six weeks while the broader index gains 5%, and the top five clients account for 70% of the total buy volume. The exchange's surveillance system flags this concentration and price deviation, placing the stock in Short-term ASM Tier 1. A trader holding 1,000 shares worth ₹5,00,000 who had previously been using 20% margin now needs ₹3,50,000 in margin (50% ASM margin plus the pre-existing VaR margin) to maintain the position. If the stock remains in ST-ASM for the next review cycle, it escalates to LT-ASM at 100%, requiring ₹5,00,000 in margin — effectively forcing fully funded delivery buying.
Stay ahead of margin changes
TradePulse's open interest and volume analytics help you spot unusual activity in stocks before ASM flags them and margin requirements jump.