IPO-Bound NSE Seeks Closure of Co-Location, Dark Fibre Cases with ₹1,388 Crore Offer to SEBI

IPO-bound National Stock Exchange (NSE) has proposed a ₹1,388 crore payment to the Securities and Exchange Board of India (SEBI) to settle 2 major cases: co-location and dark fibre. If accepted, this would be the highest settlement figure to date and could remove key obstacles from NSE's path to a long-awaited initial public offering (IPO).

IPO-Bound NSE Offers ₹1,388 Crore Settlement to SEBI

NSE submitted 2 applications to SEBI, offering ₹1,165 crore for the co-location case and ₹223 crore for the dark fibre matter, as per documents reviewed by Economic Times. This offer is made under the regulatory settlement mechanism, allowing entities to resolve disputes without admission of guilt. The proposal is currently under regulatory consideration.

Background of the Co-Location Case

The co-location issue originated in 2015 when a whistleblower flagged possible unfair practices at the exchange. SEBI’s investigation found that certain brokers received faster access to NSE’s trading servers, generating questions around unequal trading opportunities. SEBI ruled that the tick-by-tick data system gave specific brokers a speed advantage due to server port configuration loopholes.

The Dark Fibre Controversy

In a parallel concern, in 2015, NSE allowed Sampark Infotainment Pvt Ltd to install dark fibre lines for brokers like Way2Wealth Brokers and GKN Securities. However, Sampark was neither an authorised vendor nor approved by the Department of Telecommunications. Regulators found negligence on NSE's part in vendor verification, sparking further legal trouble.

Read More: SEBI Chief Confirms No Obstacle — Is NSE IPO Finally Getting the Green Signal!

Regulatory Actions and Legal Proceedings

SEBI had earlier imposed penalties on 16 entities, including NSE and its former leadership. These were partially overturned by the Securities Appellate Tribunal, prompting SEBI to appeal to the Supreme Court. If a settlement is reached, the apex court proceedings are expected to be withdrawn.

Implications for NSE’s IPO Plans

This proposed settlement is seen as a strategic move to clear regulatory barriers to NSE's IPO, which has been delayed for several years. Since assuming office in February 2025, SEBI Chairman Tuhin Kanta Pandey has apparently opened the window for fresh discussions. However, SEBI’s final approval will depend on the resolution of additional compliance concerns, including technological infrastructure and governance standards.

Conclusion

NSE’s ₹1,388 crore settlement offer aims to bring closure to two of the most high-profile regulatory cases in India’s capital markets. If accepted, it could mark a turning point for NSE, potentially opening the door for its long-anticipated stock market listing. Regulatory nod and completion of all compliance checks will be the next decisive steps in this saga.

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