NSE IPO Path Clears as SEBI NOC Nears Month-End Approval

SEBI Chairman Tuhin Kanta Pandey declared on Saturday that the regulatory organisation will provide the National Stock Exchange with the approval to proceed with its entry into the stock market before the end of January. Subsequently, the NSE will be required to enter an initial listing phase wherein several years’ worth of legal disputes regarding the financial institution will have been fully resolved, thus allowing for the entry into an initial listing.

Dark Fibre Case Resolution

The NSE IPO was delayed until 2019 due to allegations of fraudulent share access via co-location servers by high-frequency trading companies. SEBI ordered the forfeiture of ₹62.58 crore as well as prohibited NSE senior officials from operating in the financial markets. The SEBI decisions were subsequently overturned by SAT and challenged by SEBI in the Supreme Court in the years 2023-2024. The issuance of a no-objection certificate is indicative of a full closure of the process before regulatory approval is granted to NSE.

Unique Listing Requirements

No objection certificates must be obtained from SEBI prior to submitting the draft red herring prospectus by all market infrastructure institutions, such as stock exchanges, clearing corporations and depositories, as these institutions provide critical components that are necessary for maintaining the stability of financial institutions. NSE represents an enormous step towards the democratisation of ownership of stock exchanges.

Valuation Context

Unlisted NSE shares trade at exceptionally high multiples of valuations compared to listed BSE shares. As per InCred estimates, the market capitalisation of NSE is now about five times that of its listed equivalent on the BSE. The large gap in market capitalisation illustrates the strong economics of an exchange monopoly when considering an approximate annual turnover of ₹450 lakh crore annually.

Listing Implications

Don't forget that listing on NSE allows employees to monetise ESOPs worth thousands of crores and allows financial institutions that wish to invest in India's premier equity markets. Through this listing, NSE has added significantly more transparency to its governance due to the dominant presence of retail trading orders submitted to the exchange.

Strategic Roadmap

Issuing the No Objection Certificate (NOC) for the NSE will allow it to begin the process of issuing its Draft Red Herring Prospectus (DRHP) within the next 3-6 months, with the target of listing in the second half of calendar year 2026.