Regulation GSM Restrictions

GSM stage 2+ restrictions

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At GSM stage 2 and above, restrictions tighten:

StageRestrictions
Stage 2100% upfront margin; tightened price band (5-10%)
Stage 3Trade-to-Trade settlement; no intraday
Stage 4-6Tighter price band (2-5%); Periodic Call Auction; severe restrictions

Why this tightening

GSM stages reflect escalating fundamental concerns. The tighter restrictions:

  • Reduce speculative interest.
  • Allow regulator time to investigate.
  • Protect retail investors.

Impact on retail traders

For scrips at GSM stage 2+:

  • No intraday.
  • Tighter price bands restrict daily moves.
  • Possibly Periodic Call Auction matching.
  • Limited liquidity as participants exit.

Recovery

A scrip can de-escalate (GSM stage falls) if:

  • Fundamental concerns improve.
  • Compliance restored.
  • Multi-month observation period clears.

See also

External references

References

  1. NSE India, GSM stage restrictions, nseindia.com.
  2. SEBI, GSM framework, sebi.gov.in.

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