The chairman of the Securities and Exchange Board of India (SEBI) , Tuhin Kanta Pandey has once again hinted that the NSE IPO may not be far away. Speaking at CFO awards event in Mumbai, Pandey said, “ I have said before that there is no obstacle that will remain in case of NSE-IPO”.
He also clarified that the issue of demerger of clearing corporations before the NSE IPO is not an issue. “That particular thing is not really an obstacle in terms of an IPO process,” Pandey said. He said that the consultation paper about the demerger of clearing corporations reflected the regulator’s thoughts and was not a final policy decision.
Commenting further on NSE Pandey said: “ I think they are settling out all those things which are there. There is some legal settlement and other things and some amount will have to be paid and that cases would have to be withdrawn and so on.”
Moneycontrol had earlier reported that NSE and SEBI are in advanced talks about the settlement of the so-called co-location case, which is a key issue before SEBIs market regulation department issues a No objection Certificate, a requisite for filing the IPO application by NSE. In the co-location case, it was alleged that some brokers improperly placed their servers physically closer to the exchange’s servers for faster data access, gaining an unfair edge over competitors.
As per sources, SEBI and NSE are in talks to finalize the terms for settlement. Once the terms are agreed then the formal process will start.
NSE’s request for consent settlement
In a letter to SEBI dated March 28, NSE conveyed its intent to resolve outstanding matters. “NSE is keen to resolve all pending matters amicably through settlement mechanism, as available and appropriate,” the exchange wrote. The Governing Board of NSE has already approved a plan to explore amicable settlement, and NSE has sought a No Objection Certificate (NOC) from SEBI. The exchange had also earlier written to SEBI on August 27, 2023, to request a consolidated settlement of all cases pending before the regulator and other legal forums.
Supreme Court approval needed
Any settlement is contingent on SEBI and NSE reaching an agreement on consent terms and securing approval from the Supreme Court to withdraw the case.
Legal experts say the moment an in-principle agreement is reached, the terms will be placed before the top court. This is because SEBI had appealed the SAT order in the co-location case before the Supreme Court. If allowed by the court, the consent process could proceed and may take three to four months to complete.
Co-location order and SAT’s reprieve
In April 2019 order Sebi had directed NSE to disgorge Rs 625 crore, along with 12 percent annual interest from April 1, 2014, for a range of violations. However, in 2023, SAT partially overturned the ruling.
The appellate tribunal found SEBI’s disgorgement demand unwarranted. It noted that NSE had not violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and that no fraud had been committed by the exchange or its employees.
SAT observed that “it is only a case of non-adherence of a circular to some extent,” and concluded that NSE’s conduct didn’t breach the SEBI Act or its regulations.
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