NSE IPO: Regulatory Hurdles and Ongoing Discussions with SEBI

The National Stock Exchange (NSE), India’s largest equity bourse, has long harboured plans to go public. Initially filing its draft red herring prospectus in 2016 to raise ₹10,000 crore through an offer for sale, the IPO was expected to be a landmark event in Indian capital markets. However, the process has been delayed for over eight years due to regulatory concerns.

Key Concerns Raised by SEBI

According to recent comments mentioned in the PTI report, Sebi Chairperson Tuhin Kanta Pandey, the market regulator, has flagged several critical issues. These include:

• Compensation Structure: The remuneration and benefits given to key management personnel are under scrutiny.

• Technological Framework: Concerns related to the technological infrastructure and systems at NSE remain unresolved.

• Clearing Corporation Ownership: The majority ownership of NSE in its Clearing Corporation has raised questions about regulatory independence and risk management.

Read More: Here’s Why the NSE IPO Faces a Delay

Ongoing Dialogue Between NSE and Sebi

Despite the delay, there is renewed momentum in the process. NSE has filed for a No Objection Certificate (NOC) with Sebi, which is a preliminary step towards resuming the IPO proceedings. However, the timeline for the public offering remains indefinite.

Pandey, in a recent interview with PTI, stated: “There are certain issues…which have been under discussion between NSE and Sebi. And with a very intent to clear it going forward, we will try and resolve these issues.”

This statement indicates the regulator’s willingness to facilitate the IPO, provided that foundational concerns—especially those linked to corporate governance—are addressed.

Governance and the Co-location Legacy

One of the persistent regulatory concerns stems from the co-location case, where certain brokers were allegedly given unfair access to NSE’s trading systems. This controversy has influenced Sebi’s cautious stance on granting the IPO approval. Since the original filing, NSE has made multiple attempts to seek Sebi’s nod, each time hitting a wall over unresolved governance issues.

Formation of Sebi’s Internal Committee

In March, Sebi constituted an internal committee specifically to assess NSE’s IPO application. This marked a significant move, signalling that the regulator is actively engaged in evaluating the listing plan. The committee is tasked with ensuring that all outstanding issues are adequately resolved before any green light is given.

Current Valuation and Market Standing

NSE holds an estimated valuation of ₹4.7 lakh crore, placing it among India’s most valuable companies. As per the 2024 Burgundy Private Hurun India 500 list, which ranks both listed and unlisted entities, NSE is the 10th-most valuable private firm in the country. Its dominant market position and financial strength add to the anticipation surrounding its public debut.

Conclusion

While NSE’s intent to list remains strong and regulatory engagement is active, the IPO will only move forward once Sebi’s concerns are fully addressed. The unfolding dialogue represents a crucial phase in balancing market integrity with the ambitions of a key financial institution.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.