In the stock market, you might have heard about ASM, which stands for Additional Surveillance Measure. It’s a framework that helps regulators monitor and manage stocks that show unusual trading patterns. This blog will explore what ASM is, how it affects stocks, and how it differs from GSM (Graded Surveillance Measure). Whether you’re new to investing or looking to understand these measures better, this guide will provide clear and simple explanations to help you make informed decisions.
Additional Surveillance Measure (ASM) Overview
ASM, or Additional Surveillance Measure, is used in the stock market to monitor stocks with unusual trading behaviour. If a stock shows erratic price changes or high trading volumes, it may be put under ASM. This means the stock might face extra rules, like higher margins or trading limits, to control its activity.
The goal of ASM is to make sure that any unusual trading is checked carefully to prevent market manipulation. By understanding ASM, you can be aware of which stocks are under extra surveillance and adjust your investment choices to avoid potential risks.
ASM List in Stock Market
The ASM list is a special list of stocks that are under Additional Surveillance Measure. When a stock exhibits unusual trading patterns or high volatility, it gets added to this list. The purpose of the ASM list is to keep a closer eye on these stocks to ensure fair trading. Stocks on this list may face stricter rules, such as increased margins or trading limits, to prevent any potential market manipulation.
Investors can check the ASM list to see which stocks are currently under extra scrutiny. This information is usually available on the websites of stock exchanges like NSE or BSE. Knowing which stocks are on the ASM list can help investors make informed decisions and avoid stocks that might be facing additional risks.
By staying updated with the ASM list, you can manage your investments better and be aware of any extra precautions you may need to take.
What is ASM and GSM in Stock Market?
| Aspect | ASM (Additional Surveillance Measure) | GSM (Graded Surveillance Measure) |
| Purpose | To monitor stocks with unusual trading behaviour or high volatility | To provide a graded approach to monitor stocks over time based on their trading performance. |
| Criteria | Stocks with erratic price movements or high trading volumes. | Stocks with consistent trading issues over a longer period. |
| Measures Applied | Additional margins, trading limits, and closer scrutiny. | Gradual increase in surveillance levels based on trading patterns. |
| Application | Immediate action to control unusual trading activities. | Gradual measures depend on the stock’s behaviour and performance. |
| Focus | Short-term surveillance for immediate issues. | Long-term monitoring with varying levels of surveillance. |
What is ASM Framework in Stock Market?
The ASM framework is a system used to keep an eye on stocks with unusual trading activities. Here’s the breakdown:
Purpose of ASM Framework
To ensure the stock market remains fair and to protect investors by monitoring stocks with unusual trading patterns.
When ASM Framework is Used
Applied to stocks that show significant price changes or have very high trading volumes compared to normal.
What ASM Framework Does
Higher Margins: Investors might need to put up more money to trade these stocks, which helps prevent risky trading.
Trading Limits: There might be limits on how many shares can be bought or sold in a certain time frame.
Closer Monitoring: These stocks are watched more closely to detect any unusual activity.
Review Process
Stocks on the ASM list are checked regularly to see if they still need special attention.
If the stock’s trading stabilises, it might be removed from the list.
Impact on Investors
Knowing which stocks are under ASM helps investors be more informed.
Also Read: Steps to Invest in Stocks Via SIP
Criteria to Determine ASM List Stocks
Here are the key criteria used to decide which stocks are added to the ASM (Additional Surveillance Measure) list:
1. Price Volatility
- Stocks that experience sudden and large price changes over a short period are considered.
- Frequent and significant deviations from the stock’s usual price range are also monitored.
2. Trading Volume
- Stocks with unusually high trading volumes compared to their normal levels are flagged.
- A sharp increase in trading activity that is not explained by company news or market conditions is also considered.
3. Price Fluctuations
- Significant fluctuations in stock prices, especially when they are not in line with market trends, are monitored.
- Large swings in price within a single trading day or across multiple days are taken into account.
4. Unusual Patterns
- Any abnormal or irregular trading patterns that deviate from the stock’s usual behaviour are checked.
- Patterns of rapid buying or selling that do not correspond with the company’s fundamentals or news events are noted.
5. Market Alerts
- Stocks that trigger market alerts due to sudden price or volume spikes may be included on the ASM list.
- Alerts generated by automated systems for unusual trading activities are reviewed.
Conclusion
ASM, or Additional Surveillance Measure, is crucial for maintaining market integrity. It helps keep a close watch on stocks with unusual trading patterns to prevent potential market manipulation.
By understanding ASM and its framework, you can make more informed investment decisions and navigate the stock market with greater confidence. Whether you’re tracking the ASM list or comparing ASM with GSM, staying informed will help you manage your investments better.
FAQs
Ans: A stock may be placed under ASM if it shows unusual price volatility or abnormal trading volumes. This is done to monitor potential market manipulation or risks more closely.
Ans: You can check the ASM list provided by stock exchanges like NSE or BSE. This list is regularly updated and available on their official websites.
Ans: Not necessarily. It means the stock is under increased scrutiny due to unusual trading activity. It’s important to review the reasons for ASM placement before making investment decisions.
Ans: Prolonged placement under ASM may indicate persistent issues, leading to stricter measures or removal from trading. Continuous monitoring helps in deciding further actions.
Ans: Stocks under ASM might have additional restrictions, so you may need to adjust your trading strategy accordingly. Be aware of increased margins or trading limits that could affect your trades.
Ans: ASM provides immediate surveillance, while GSM offers a graded approach based on long-term trading behaviour. GSM assesses stocks over time and adjusts surveillance levels gradually.
Ans: Yes, stocks can be removed from the ASM list if their trading patterns stabilise and no longer warrant additional surveillance. Regular reviews ensure that only necessary stocks remain on the list.
