Explainer: How Sebi's progressive ESM framework overhaul will benefit investors and micro-small companies

economictimes.indiatimes.com:

The recent momentous decision by the Securities and Exchange Board of India (Sebi) to revise the Enhanced Surveillance Measure (ESM) framework, in partnership with NSE and BSE, signifies a progressive stride towards ensuring market liquidity and nurturing growth opportunities for micro-small companies.Unlocking Opportunities for InvestorsWith the revised ESM framework, investors are set to benefit from increased trading opportunities. Previously, stocks under ESM Stage-II were restricted to trading once a week, posing challenges for investors seeking continuous engagement.

The inclusion of a controlled ± 2% price band ensures stability while allowing for reasonable price fluctuations, striking a balance between facilitating trading activity and minimizing excessive volatility. Additionally, the requirement of a 100% margin remains unchanged, serving as a vital risk management mechanism to protect investors and maintain market discipline.

However, with the new guidelines in place, trading on all days will be permitted, offering a more dynamic and fluid market experience. This shift provides investors with the flexibility to respond to market developments promptly, adapt their investment strategies, and capitalize on potential price movements, all while ensuring adequate risk management through the unchanged 100% margin requirement.Empowering Micro-Small CompaniesThe ESM framework's primary focus lies on highly volatile «micro-small» companies with a market cap of less than Rs 500 crore.

By enabling constant trading with a controlled ± 2% price band, the revised framework aims to empower these companies with greater visibility and the potential to attract investors. The inclusion of T2T settlement further reinforces the