Effective October 7, 2024, the Exchange Surveillance Mechanism (ESM) rule for Small and Medium Enterprises (SMEs) will be implemented. Here are some key points to note:
A) The rule does not apply to SME companies with a market capitalization exceeding INR 1000 crores.
B) If a stock experiences a price increase of 50% or more in the last 3 months, 75% or more in the last 6 months, or 100% or more in the last 12 months, it will be moved to ESM 1, with a maximum upper circuit limit of 5%.
C) If an ESM 1 stock moves 15% or more in the previous 5 days beginning from Friday, it will be moved to ESM 2. Alternatively, if an ESM 1 stock moves 30% or more in the last 30 days, it will also be moved to ESM 2. In this stage, the maximum upper circuit limit will be 2%, and trading will be conducted on a periodic call auction basis.
D) If a stock in ESM 2 does not move above 8% in the last 30 days, it will be moved back to ESM 1. Otherwise, it will continue to trade in ESM 2.
E) The minimum period for a stock to remain in ESM 1 is 90 days.
