Sebi Extends Surveillance and Trade-for-Trade Settlement to SMEs

The Securities and Exchange Board of India (Sebi) has made the trade-for-trade (TFT) settlement framework and short-term additional surveillance measure (ASM) applicable to small and medium enterprises (SME) stocks. According to brokers, the move will help to avoid stock price manipulation. The framework will come into force on October 3, 2023.

“As per the Joint Surveillance Meeting of Exchanges and Sebi, the extant Trade for Trade (TFT) and short-term additional surveillance measure (ASM) framework shall be extended to SME stocks subject to certain changes,” Sebi said in a statement.

According to a National Stock Exchange (NSE) circular, market participants should note that the TFT and ASM framework will be implemented in conjunction with all other prevailing surveillance measures imposed by the Exchanges from time to time.

Trade for Trade Settlement, also referred to as T+0 settlement, is implemented in specific scenarios to guarantee prompt settlement. It is used for securities that exhibit higher price volatility or are associated with corporate actions such as bonus issues. While it mitigates settlement risk, it may potentially restrict liquidity.

Additional Surveillance Measure (ASM) is a regulatory measure by Sebi to monitor highly volatile stocks. It controls speculative trading and safeguards the interests of retail investors.