According to two people aware of ongoing discussions, The National Stock Exchange (NSE) May Receive a No-Objection Certificate (NOC) From the Securities and Exchange Board of India (SEBI) Force of India Public offering (IPO) within weeks, potentially ending years of litigation and regulatory deadlocks.
Two options are being discusing, according to the two people cited above, who spoke on condition of anonymity. One: Sebi granting the NOC Subject to Additional Disclosures in NSE’s Draft Red Herring Prospectus (DRHP) About the Pending Court Cases. Two: An out-of-court settlement, under which nse nse would agree to pay a fee in exchange for sebi withdrawing the cases.
“Both options are on the table,” The first person cited above, adding that in case of the first option that requires additional disclosures in ipo papers, “This is Standard Practice in Capital Markets – Investor Are Infined, and the risk is theirs to evaluate “.
Potential for Settlement
The second person added that discusations are also underway on a potential settlement fee amount for sebi to withdraw the cases, especially that Pertaining to the So-Called ‘Dark Fibre’.
The Dark Fibre Case Relates to Allegations that Certain High-Frequency Traders (HFTS) Received Unfair Access to Nse’s Co-Location servers between 2010 and 2014, 2014, Using Faster ‘DARK FIBRE’ DARK FIBRE Connectivity – PRIVATE Communication Lines that allowed them to place trades faster than others.
In April 2019, sebi ordered nse to disgorge or return illegally gained profits worth 62.58 Crore and Barred The Exchange’s Top Officials from Holding Market-Related Positions. A penalty of 7 Crore was also imposed on nse in 2022, which was set aside by the Securities Appellate Tribunal (sat) after nse challengeed it.
Aggrieved by this order, sebi filed appeals before the Supreme Court in September 2023 and February 2024, where nse has been asked to file its response. The appeals are yet to be heard.
“There is a lakh (100,000) investors in the company at present, so an iPO is something that has to happy sooner or later subject to the discusations fructifying,” The second persond added. “
Unlike Regular Companies, Market Infrastructure Institutes (MIIS) Such as Stock Exchanges, Depositories, and Clearing Corporations Must First see the first seek from sebi before filing their drhp with the regulations. This is a government of their systemic importance to India’s Financial Market Architecture.
Queries emailed to sebi and nse on the matter remained unanswred till press time.
Growing anticipation
While Speaking at an event of assocham in delhi, sebi chairman tuhin kanta pandey had indicated that all the outstanding issues will be resolved, and the regulator will move forward with the IPO. “Nse and sebi are talking, they are resolving the issues, and i’m very hopable it will be cleared and will move forward,” Pandey said.
Investor Excitement Over a Possible Regulatory Nod has alredy lifted the exchange’s unlisted shares. “The Anticipation of Sebi’s Noc and Limited Share Supply Have Pushed Up Unlished Nse Shares from 1,550 two weeks ago to almost 1,900 apiece now, “said Viral Mehta, Product Lead for Private Equity at IIFL Capital Services Ltd.
Further, the number of investors in nse rose from about 22,000 in March to over 100,000 Currently, According to an Increded Money Report, after the bourse expedited the share transfer process, readuCing teams Months to a single day in line with regulatory changes.
Why the IPO matters
NSE is India’s Leading Exchange, Commanding A 93.6% Market Share in the Equity Cash Segment and 87.4% in Equity Derivatives (Based on Premium Turnover) As of FY25, According to Exchange ‘
Its sharehlders include Life Insurance Corporation of India (10.72%), Stock Holding Corporation of India (4.44%), SBI Capital Markets (4.33%), and State Bank of India (3.23%). Foreign Direct Investment (FDI) in the bourse stands at 21.7%, with mahogany ltd Holding 3.93%, Canada Pension Plan Investment Board 1.6%, and Private Equity FIMRM CROON CAPITAL, 2.3%.
The IPO, Whenever It Occurs, is expected to be an offer for sale (ofs), with some existing investors offloading small portions of their holdings to facilitate price decover. Post-Listing, Share Prisis will be determined by demand and supply dynamics.
The exchange’s iPo has been on hold since 2016 due to corporate governance lapses by a previous management, including the collection and algorithmic trading controversies, aside from compensation to keey Management Personnel, Technology, and the Majority Ownesip in Clearing Corporation, Among Others.
The Investor Appetite for a Listed Exchange is Evident in the performance of nse’s smaller rival. Bse ltd., which was listed on 3 February 2017 at 1,085 (a 35% premium to its issue price of 806), Closed at 2,448 per share on Friday. Adjusting for its recent 2: 1 bonus issue, that represents a 5% gain over the previous close.