SEBI Chairman Tuhin Kanta Pandey: "Working to Sort Out Issues" of NSE's Long-Awaited IPO

In a momentous development for India's financial market, the chairman of the Securities and Exchange Board of India (SEBI), Tuhin Kanta Pandey, has once again promised that SEBI will try and resolve the issues that have been halting the IPO of the National Stock Exchange (NSE) for many years. Pandey stressed SEBI's commitment to putting public interest above commercial considerations at an industry event on Thursday.​

"We will not allow commercial interest to take over the general public interest, and it is for the regulator to ensure that," Pandey stated, highlighting SEBI's role in safeguarding investor interests during the IPO process.

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A Protracted Journey Towards Listing

The NSE, India's largest stock exchange, initiated its journey for public listing in 2016. However, this process took a setback due to several controversies surrounding it, the most important being the co-location scam in which some brokers obtained alleged undue access to the exchange's trading system. In 2019, SEBI slapped an NSE fine of ₹11 billion for nominal access and returned its documents for listing.

In spite of the disruptions, NSE continued its attempts to go public again and applied again last year for a "no-objection" certificate with SEBI. However, in March 2025, reports mentioned that this delay might stretch to more than two years because of SEBI's concerns about governance, internal processes, and the exchange's stake in its clearing corporation.

Clearing Corporation Ownership: A Central Concern

One of the primary issues SEBI highlights is NSE's ownership of NSE Clearing Ltd (NCL). The regulator has expressed concerns about potential conflicts of interest arising from the exchange's dominant stake in its clearing corporation. SEBI has proposed reducing the concentration of power held by stock exchanges over clearing corporations, suggesting that over time, the parent exchange's stake should be reduced to below 15%.

In response, NSE has maintained that its ownership structure complies with existing regulations but acknowledged that potential changes in clearing corporation ownership regulations could be disclosed as a risk factor in its draft red herring prospectus (DRHP).

Recent Settlements and Steps Forward

In a move towards compliance, NSE paid ₹6.43 billion ($75.2 million) in October 2024 to settle a separate unfair access case related to its algorithmic trading software. This settlement potentially removes key obstacles to its IPO.

SEBI Chairman Pandey has indicated that the regulator is actively working to resolve the issues delaying the NSE's listing. "We will apply our minds to NSE's IPO proposal. We will look into the issues and how we can take it forward," he stated, signalling a more open stance towards the exchange's public offering.

Market Implications and Investor Sentiment

According to the NSE, it has its public issue among the most awaited in the context of financial history in India. It is estimated that the exchange shares are valued at ₹4.75 lakh crore in the unlisted market, and the listing is expected to enhance transparency and accountability. According to Sriram Krishnan, Chief Business Development Officer at NSE, the objective of an IPO is to enhance transparency and accountability. "We are valued at around ₹4.75 lakh crore in the unlisted market, and as India's largest exchange, we should be accountable to the market," he added.

This indicates that investor interest in NSE shares is palpable, as the number of shareholders has increased significantly over the last few years. Just 1,941 shareholders were recorded as of December 31, 2021, and the number grew to 11,274 by December 2023 and is expected to touch almost 20,500 by December 31, 2024.

Looking Ahead

Although there has been no formal filing for the NSE IPO, market insiders indicate that if legal clearances and shareholder approvals go smoothly, the IPO could be launched in late 2025 or early 2026. SEBI's recent utterances are taken as comforting clues, which have heightened hopes in the markets and among other potential investors.

With SEBI resolving the ongoing concerns, the financial community looks forward to NSE's journey as a publicly listed company reaching fruition, a milestone in the historical evolution of the capital market in India.