Long-term ASM Stage 1 to 4
Long-term Additional Surveillance Measure (LT-ASM) is the multi-stage surveillance framework operated jointly by NSE and BSE. Scrips are added based on statistical triggers and escalate through Stages 1-4 as conditions warrant. Each stage imposes progressively tighter trading restrictions.
The 4 stages
| Stage | Restriction summary |
|---|---|
| Stage 1 | 100% upfront margin; price band may tighten to 5%-10% |
| Stage 2 | 100% upfront margin + Trade-to-Trade settlement (no intraday) |
| Stage 3 | T2T settlement + tighter price band (5% or 2%) |
| Stage 4 | T2T + 2% price band + Periodic Call Auction (limited matching windows) |
Each stage builds on the previous; a Stage 4 scrip has all the restrictions of Stages 1-3 plus the additional ones.
Stage 1: entry-level surveillance
A scrip enters LT-ASM Stage 1 when monthly statistical triggers fire. Triggers include:
- High-low variation of the scrip’s price relative to closing.
- Volume unusual relative to free float and historical activity.
- Delivery percentage unusually low (high speculative content).
- Number of unique clients abnormally low (concentration concerns).
- Price change beyond defined threshold (5x to 10x over 6-12 months).
Restrictions at Stage 1:
- 100% upfront margin (no intraday leverage).
- Price band typically tightened.
Effect: speculative intraday activity declines; the scrip becomes a delivery-only product for retail.
Stage 2: trade-to-trade enforcement
If a Stage 1 scrip continues to show surveillance triggers (or new triggers escalate), it moves to Stage 2.
Additional restrictions:
- Trade-to-Trade (T2T) settlement: every trade must be settled by delivery. Intraday is not possible.
- Inter-day netting disabled.
For Zerodha clients, this means MIS orders are rejected on Stage 2 scrips. CNC is the only product option.
Stage 3: tighter price bands
Scrips that remain in LT-ASM and continue to trigger move to Stage 3.
Additional restrictions:
- Price band tightened further (typically to 5% or 2%).
- Some scrips may be moved to a separate session with shorter trading hours.
The tight price band caps daily price moves, allowing time for surveillance authorities to investigate.
Stage 4: periodic call auction
Stage 4 is the most restrictive level. Triggers usually relate to:
- Persistent trigger across many months.
- Compliance concerns from the listed company.
- Auditor / governance issues that don’t reach delisting threshold.
Additional restrictions:
- Periodic Call Auction: trades match only at scheduled intervals (e.g., every 30 minutes), not continuously. See Periodic Call Auction stocks .
- 2% price band cap.
- T2T plus 100% upfront margin.
At this stage, trading is technically possible but heavily restricted. Many investors choose to exit before Stage 4.
How the stages are triggered
The triggers are statistical and computed at month-end. The exchange publishes the updated ASM list on the last working day of each month, effective from the next month’s first trading day.
Key triggers (varies between NSE and BSE):
| Trigger | Approximate threshold |
|---|---|
| Price change over 6 months | More than 100% (positive) or less than -50% (negative) |
| Delivery % | Less than 20% over 30 days |
| Volume / free float ratio | Above defined threshold |
| Unique client count | Lower than threshold |
| Realised volatility | Above threshold |
If multiple triggers fire concurrently, the stage is set to the appropriate level.
How to move out of ASM
A scrip exits LT-ASM when:
- Triggers normalise for the exchange’s defined observation period (usually 1-3 months).
- No new triggers fire during the observation period.
- Exchange surveillance committee clears the scrip.
The path from Stage 4 back to Stage 1 can take 6-12 months; from Stage 1 to non-ASM can take 1-3 months.
How retail traders should react
Already holding a Stage 1 scrip
Stage 1 alone is not a sell signal. Many scrips dip in and out of Stage 1 without permanent issues. Reassess based on the underlying fundamentals.
Holding a Stage 2-3 scrip
This is a clearer signal of concern. Consider:
- Why is the scrip in surveillance?
- Is the trigger transient (e.g., one-time price spike) or persistent (governance / earnings)?
- Is the position size such that a 50%+ adverse move is unacceptable?
For position sizes that would meaningfully damage your portfolio, consider exiting via the delivery sell route.
Holding a Stage 4 scrip
Stage 4 is a strong adverse signal. Liquidity is poor, restrictions are heavy. For most retail investors, exit (even at a discount) is preferable to continued holding without active conviction.
See also
- ASM and GSM frameworks explained
- Short-term ASM
- Trade-to-Trade segment rules
- Periodic Call Auction stocks
- Circuit filters NSE BSE
- Delivery volume percentage on the Kite marketwatch
- SEBI peak margin rules explained
- Upfront margin requirements post-2020
- 50:50 cash collateral rule explained
- Direct payout to demat SEBI rule
- Margin trading SEBI new rules 2026
- Instant settlement T+0 stocks list
- Settlement cycle changes 2025-26
- Kite Holdings tab explained
- Kite Positions tab explained
- How to use the marketwatch on Kite
- How to add scrips to the Kite marketwatch
- Market depth view on Kite
- Day’s change in absolute and percentage
- 52-week high and low on the marketwatch
- How to fix LTP zero on marketwatch
- CNC product type
- MIS product type
- SEBI
- National Stock Exchange
- Bombay Stock Exchange
- Penny stock (India)
- Kite (Zerodha)
- Zerodha
External references
References
- SEBI, Additional Surveillance Measure framework, circular dated 18 May 2018 and subsequent updates.
- NSE India, Long-term ASM operational guidelines, nseindia.com.
- BSE India, Long-term ASM rules, bseindia.com.
- Zerodha Support, ASM and GSM scrips, support.zerodha.com.