Why is a security banned from trading?

Why Can a Security Be Banned?

At FYERS, a security may be temporarily or partially banned from trading due to exchange-imposed surveillance measures. These actions are mandated by SEBI and stock exchanges to curb speculation, ensure fair pricing, and protect investors. The three most common reasons are:

  • F&O Ban – when derivative positions exceed exchange-defined limits.
  • Graded Surveillance Measures (GSM) – for stocks showing speculative or unjustified price movement.
  • Additional Surveillance Measures (ASM) – for securities with high volatility or unusual trading activity.
Important: These restrictions are regulatory. FYERS automatically enforces them based on exchange notifications.

1. F&O Ban (Market Wide Position Limit - MWPL)

A stock enters the F&O ban list when the total open interest in its derivative contracts exceeds 95% of the Market Wide Position Limit (MWPL). This restriction helps reduce speculative pressure in derivatives.

  • Banned: Open interest exceeds 95% of MWPL.
  • Ban lifted: Open interest drops below 80% of MWPL.

During the ban period:

  • No new positions can be initiated.
  • Only square-off (exit) of existing positions is allowed.
  • Intraday and positional trades remain blocked until the ban is lifted.
ScenarioOutcome
I try to place a new F&O orderThe order will be rejected by the exchange.
I already hold a positionYou may square it off but cannot increase exposure.
The ban is liftedNormal trading resumes once open interest falls below 80% of MWPL.
Tip: Always check the daily F&O ban list on NSE or BSE before placing trades in derivatives to avoid rejections.

2. Graded Surveillance Measures (GSM)

GSM is a regulatory framework that restricts trading in stocks whose prices deviate significantly from their financial fundamentals. It ensures investor protection and market transparency.

StageRestrictions
I100% margin; 5% price band; only delivery (CNC) trades allowed.
IITrade-to-trade; 50% Additional Surveillance Deposit (ASD); CNC disabled.
IIITrade only once per week; 100% ASD required.
IVSame as Stage III; no upward price movement allowed.
  • Intraday, CO, and BO orders are blocked.
  • GSM stocks cannot be pledged (100% haircut).
To check if a stock is under GSM, visit the NSE GSM Stock List or view the GSM FAQs (PDF).

3. Additional Surveillance Measures (ASM)

ASM stocks are closely monitored by SEBI and exchanges when unusual volatility, sharp price movements, or abnormal volumes are detected. It doesn’t imply wrongdoing but aims to prevent excessive speculation.

  • All trades are delivery-only (CNC).
  • BTST (Buy Today, Sell Tomorrow) and intraday trades are not allowed.
  • ASM stocks carry a 100% haircut and cannot be pledged for margin.
ScenarioExplanation
I try to place an intraday orderThe order will be rejected. Only delivery trades are permitted.
I attempt BTST tradingNot allowed under ASM restrictions.
I try to pledge ASM sharesThey offer no collateral benefit due to a 100% haircut.
You can verify ASM-flagged securities on the NSE ASM Securities List or refer to the ASM FAQs (PDF).

What If...

ScenarioOutcome
I try to place an order in a banned F&O stockThe order will be rejected automatically by the exchange.
I hold GSM/ASM stocksYou can continue to hold or sell them, but trading restrictions will apply.
I try to pledge GSM/ASM stocksThese are not eligible as collateral; a 100% haircut applies.
I want to confirm a stock’s restriction statusCheck the FYERS Notice Board or NSE/BSE lists before trading.
The stock moves out of restrictionNormal trading resumes automatically once the exchange lifts the measure.
FYERS automatically updates restrictions in line with exchange circulars. You don’t need to make any manual changes in your account.

Last updated: 07 Nov 2025