ESM rules were introduced on June 4 for highly volatile micro-small cap companies with a market cap of less than Rs 500 crore. Many investors complained that they could not exit these stocks as they are traded once a week. A company Mercury EV Tech has challenged the new rule at the Securities Appellate Tribunal (SAT).
Stocks under Stage-I and Stage-II are settled through a trade-for-trade mechanism with a 100% margin. A price band of 5% or 2% in case the stock is already in a 2% price band has been assigned for stocks under ESM Stage-I, while Stage-II are traded under periodic call auctions at a price band of 2%.
Stocks of public sector enterprises and banks and stocks on which derivatives products are available will be excluded from the surveillance guidelines.