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S+ Framework

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There are so many safeguards that the stock market regulator SEBI and the stock exchanges provided so as to protect investors, particularly small retail investors.

For example, moving companies to T-group and Graded Surveillance Measures are some of them.

BSE has brought about a concept called S+ framework for enhanced monitoring to curb excess volatility.

Certain restrictions such as imposition of weekly and monthly price bands in addition to existing daily, quarterly and yearly price bands and imposition of very high transaction charges will be applicable on S+ securities.

The 'S+' framework consists of the SS group and the ST group.

SS group stocks are settled on a normal rolling basis.

ST group stocks are settled on a trade to trade basis (Only delivery trades allowed, intraday and BTST not allowed).

Identification of securities for S+ framework

The identification of companies for the S+ framework is carried out on a monthly basis based on pre-defined objective criteria.

After identification, securities part of B/XC/XD group will be moved to SS group while securities part of T group and XT group will be moved to ST group.

1. Review of securities placed in “S + Framework” shall be carried out on quarterly basis instead of 6 monthly basis.

2. A periodic review of stages of securities under S+ framework shall be carried out on Bi-monthly basis instead of quarterly basis.

3. Identification of securities to be moving into S+ framework shall be carried out on monthly basis as per the existing practice.

There are 3 stages of surveillance action for stocks in S+ category.

Stage 0

  • Imposition of Weekly and Monthly price bands in addition to existing daily, Quarterly and Yearly price bands.
  • Imposition of very high transaction charges i.e. 1% of transaction value shall be applicable to both buyer and seller.
  • Group: “SS” or “ST”

Stage 1

  • All existing actions imposed under Stage 0.
  • Shifting to Trade to trade settlement mode.
  • Group: “ST”

Stage 2

  • All existing actions imposed under Stage 0.
  • Additional Surveillance Deposit(ASD) of 200% of Buy value applicable on the buyer.
  • ASD shall be released in the sixth month from the collection month i.e. minimum retention period of 5 months.
  • Group: “ST”

Review of stocks in S+ Framework

A periodic review of securities under S1 and S2 stages, to assess relaxation of surveillance action if any, shall be carried out on a quarterly basis.

An amount that is collected in the form of Additional Surveillance Deposit (ASD) will be released when a company is moved out of the S+ framework.

Other Updates

Certain stock brokers do not allow trading in S+ framework because of surveillance measures and the complications it can cause to the investor if he is unaware of the investment he is making.

For example, Zerodha does not allow fresh positions to be created but shares which are already bought in these groups can be sold out if required.

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