GSM - Graded Surveillance Measure

What is GSM or Graded Surveillance Measure in Stock Market?

GSM, short for Graded Surveillance Measure, is a regulatory framework introduced by the Securities and Exchange Board of India (SEBI) to monitor and control the trading activities of listed companies. Its main purpose is to identify and address potential issues related to market manipulation, abnormal price movements, and irregular trading patterns in specific stocks.

Stages of GSM

Stage 1: Companies placed in Stage 1 of GSM are subject to regular disclosure requirements, and their stocks can be traded in the normal manner.

Stage 2: Companies placed in Stage 2 undergo heightened surveillance, including closer monitoring of their trading activities. These companies are required to make additional disclosures to the stock exchanges and the public.

Stage 3: Companies placed in Stage 3 are subjected to the highest level of surveillance. SEBI may impose various restrictions on their trading activities, such as price bands and trading volumes, to prevent excessive speculation and manipulation.

Significance of GSM in India

GSM plays a vital role in maintaining market integrity and investor confidence. By closely monitoring the trading activities of listed companies, GSM helps detect potential irregularities and enables timely actions to safeguard the interests of market participants.

The measure also acts as a deterrent against market manipulation and insider trading, fostering a level playing field for all investors.

Impact of GSM on Companies

Companies placed under GSM may experience reduced liquidity and trading volumes due to the restrictions imposed on their trading activities. Additionally, the higher level of scrutiny can impact investor confidence and may lead to increased market volatility for these stocks.

For companies, being placed under GSM serves as a signal to strengthen corporate governance practices, ensure timely and accurate disclosures, and address any concerns that may have triggered the surveillance measure.

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