NSE, BSE to introduce surveillance mechanism for micro-small firms on Jun 5

To curb volatility in small-cap counters, leading stock exchanges BSE and NSE have put in place an enhanced surveillance mechanism for companies that have a market cap of less than Rs 500 crore.

The Enhanced Surveillance Measure (ESM) will be effective from June 5.

Sebi and exchanges in a joint meeting have decided to introduce ESM framework for "micro-small" companies (on the main board with market cap less than Rs 500 crore), the National Stock Exchange (NSE) and BSE said in two separate circulars on Friday.

The parameters for shortlisting the securities under the ESM framework include high-low price variation and close-to-close price variation.

Under the framework, the exchanges said, "... the trading for these securities will be settled through a trade for trade mechanism with a price band of 5 per cent or 2 per cent (if the scrip is already in the 2 per cent band)."

"For securities in Stage II, the trading will be settled through a trade for trade mechanism with a price band