The NSE Circular regarding Enhanced Surveillance Measures (ESM) serves several critical purposes in maintaining market integrity and protecting investors. Here’s a detailed overview:

Purpose of the NSE Circular on ESM

1. Guidelines for Enhanced Surveillance:
• The circular outlines specific guidelines and procedures for the implementation of Enhanced Surveillance Measures. These guidelines are intended to bolster market oversight and ensure that trading practices align with regulatory standards.
2. Applicability to Listed Companies:
• It specifies which listed companies are subject to ESM. The criteria for selection and the conditions under which ESM is applied are detailed, ensuring transparency in the process.
3. Actions for Non-Compliance:
• The circular delineates the actions that the NSE may take if a company or its trading patterns exhibit non-compliance with regulatory requirements. This could include increased scrutiny, trading restrictions, or other corrective measures.
4. Monitoring Unusual Trading Patterns:
• It provides a framework for monitoring and addressing unusual trading patterns. This helps in identifying potential market manipulation or irregular trading activities that could affect market stability.
5. Procedures for Implementation:
• The circular includes the procedures for implementing ESM, including the steps that need to be taken by the exchange and the responsibilities of market participants.
6. Investor Protection:
• By enhancing surveillance, the measures aim to protect investors from fraudulent activities and market abuse, thereby promoting fair and transparent trading.
7. Regulatory Compliance:
• It ensures that all market participants adhere to regulatory standards, thereby maintaining the integrity of the trading environment.

For more detailed information, you can access the full circular here.