What are surveillance measures and risks associated with them?

Surveillance measures are regulatory actions introduced by SEBI and stock exchanges to monitor and control stocks that show high volatility or unusual trading activity. These measures are aimed at protecting investors and maintaining market integrity. Common frameworks include Graded Surveillance Measures (GSM), Additional Surveillance Measures (ASM), and Enhanced Surveillance Measures (ESM), each imposing stricter controls as risk levels increase.

The risks associated with surveillance measures include reduced liquidity and tighter trading restrictions. Stocks under surveillance may require higher margins, have collateral blocked, or be placed under trade-to-trade settlement, limiting intraday or speculative trading. Such stocks may also see order rejections or restricted trading frequency, making them less suitable for short-term strategies.