The long wait for the IPO of National Stock Exchange (NSE)) may be nearing its end as market regulator Securities and Exchange Board of India (SEBI) is likely to give a No Objection Certificate (NOC) by end of next month, as per sources. A settlement application has been filed before SEBI to bring about a closure of litigation related to two issues, co-location and dark fiber. The settlement process may be completed by mid-July. In the co-location case, it was alleged that some brokers exploited NSE’s facility by placing their servers physically closer to the exchange’s servers for faster data access, gaining an unfair edge over competitors. Similarly, SEBI had penaliSed the NSE for allegedly providing preferential access to certain brokers through the use of dark fibre for faster connectivity to co-location facilities.
Moneycontrol had reported on May 26 that NSE and SEBI are in talks to settle the long pending cases. NSE has filed a settlement application with SEBI on Friday evening after multiple rounds of informal negotiations with SEBI’s department dealing with settlement applications.
The matter will be now handled by an internal committee in SEBI and subsequently will go for approval of SEBI’s Market Regulation Department, which is responsible for regulation of exchanges, depositories and clearing corporations. The department will share its feedback on the settlement amount arrived based on the formula prescribed under the settlement rules. Thereafter, the matter will go to SEBIs High Powered Advisory Committee (HPAC) on Settlements.
After a go ahead from HPAC, a panel of whole-time members (WTM) will approve the settlement application. As co-location matter is currently pending before the Supreme Court, SEBI and NSE will make a plea before the Supreme Court, saying the issue is being resolved mutually and provide the details of the settlement terms. If allowed by the apex court the case will be withdrawn by SEBI.
An email sent to SEBI and NSE seeking comments did not elicit any response.
NoC and the process thereafter
NSE is likely to initiate the process for IPO immediately after the case is withdrawn and NoC is issued. Thereafter, 4-5 months may be required for preparing the draft red herring prospectus (DRHP), as every quarterly number will have to be audited numbers. And then, around 2-3 months may be required for routine queries to merchant bankers from Sebi.
Sources said NSE listing may be possible by last quarter of the current financial year, if everything goes smoothly.
NSE's IPO plans have been stuck for over eight years now, the exchange first filed its draft papers in 2016. NSE had written to SEBI for an NOC with a similar request in November 2019, twice in 2020 and thereafter in August 2024 as well.
PSUs own around 31 percent or shares of NSE worth more than Rs 1.7 lakh crore, many of whom will see positive net worth when the shares of NSE get listed, thus giving them big financial support. Some of the large entities like LIC will also make huge profits on NSE share listing allowing them to expand their business without raising additional equities.
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