Under the current ESM framework rule, stocks were restricted to trading once a week. However, the exchanges have stated in a circular that trading in these stocks will now be allowed on all days.
In the case of trade-for-trade settlement with a price band of 2%, trading in stocks will be permitted every day. However, the rule of 100% margin remains unchanged, according to the exchanges.
All other regulations under the ESM framework remain the same. To improve market integrity and protect the interests of investors, Sebi and the exchanges have implemented various enhanced pre-emptive surveillance measures, such as reducing the price band, conducting periodic call auctions, and transferring securities to the trade-for-trade segment.
Exchanges have also introduced ESM for micro-small companies, with a market capitalisation of less than Rs 500 crore, based on parameters like price variation and standard deviation.
There are two stages under the ESM framework – stage I and II – with trade-for-trade trading and a 5% or 2% price band, depending on applicability.
Trading under the ESM framework is not considered an extreme measure, but rather a means to reduce volatility in the stock market and prevent potential losses for investors. (Disclaimer: Recommendations, suggestions, views, and opinions expressed by experts are their own and do not represent the views of Economic Times)