The National Stock Exchange, (NSE) on March 19, 2023, issued a press release regarding the surveillance actions on stocks as per non-discretionary, pre-announced, automatically applicable, transparent, regulations applicable to all eligible stock brokers.
The following has been stated namely: -
A. Transparent, Non-discretionary Rules drive Inclusion/Exclusion of stocks in ASM
• The inclusion or exclusion of stocks under (ASM) and other trading activity-based special rules such as price bands, and trade for trade are based on parameters such as price volatility, volumes, market capitalization, client concentration, liquidity, etc. The specific criteria and length of applicability have been made public and consistently implemented.
• These regulations are implemented automatically, with no human discretion These restrictions and review periods are also published in advance. The actions taken as a result of these pre-announced regulations are public knowledge and are applied uniformly to all stocks that fall under the scope of such rules.
• The entire framework has been time-tested. any changes to the said rules are communicated in advance before any future action based on the new rules becomes applicable. Process audits and periodic inspections are ensured that the parameters are in compliance The actions are carried out automatically, without exceptions. The rules, actions, durations, and so on can be found at www.nseindia.com.
B. Transparent, Non-discretionary Rules drive the Inclusion/Exclusion of stocks in indices
• The inclusion and exclusion of stocks in various Nifty indices on a regular basis have been done in accordance with transparent policies. NSE Indices Limited maintains all Nifty indices, which are based on index methodology that are objective, non-discretionary, rules-based, pre-announced, and transparent.
• These regulations are enforced automatically, with no human intervention. Furthermore, the outcomes of such automatic rules-based evaluations are communicated long before any modifications to the indexes are implemented.
• The index criteria for including any stock into an index or excluding any existing stock from an index is well defined, documented, and made available on NSE and NSE Indices website (www.nseindia.com and www.niftyindices.com). The specific methodology for each Nifty index may be different based on the objective of the index and the underlying market that the index seeks to represent. For example, the inclusion of stocks in Nifty 50, India’s flagship index, is based on free-float market capitalization, impact cost, trading frequency, and availability of stock for trading in the F&O segment of the exchange
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