Sebi said to have accepted NSE's consent applications
The move is expected to clear the final regulatory hurdle for the listing of India’s largest stock exchange, whose IPO has been stalled since 2016 amid regulatory probes pertaining to alleged lapses by a former management.
Mumbai: The Securities and Exchange Board of India (Sebi) has accepted the settlement applications filed by the National Stock Exchange to resolve pending regulatory investigations, potentially paving the way for the long-delayed initial public offering (IPO) of India’s largest stock exchange, according to a person familiar with the matter.
Sebi is likely to issue a formal no-objection certificate (NOC) by the end of this month, the person said, adding that this would allow the NSE to proceed with filing its Draft Red Herring Prospectus for the IPO.
NSE has offered to pay around ₹1,400 crore to settle pending cases in the Supreme Court. Under Sebi’s settlement rules, entities can resolve probes by paying a monetary amount without admitting or denying guilt.
“The fact that an application has been filed for around ₹1,400 crore indicates that the two parties have arrived at a settlement amount. This, in turn, will clear the decks for Sebi to issue the NOC to NSE by month-end," the person said, requesting anonymity.
A consent order is passed by Sebi when a regulated entity pays a certain fee without accepting or denying guilt. The filing of the consent applications was preceded by several rounds of discussions between Sebi and NSE over the settlement amount, among other issues.
The settlement applications relate to multiple regulatory investigations, including the co-location and dark fibre cases. NSE and Sebi did not immediately respond to queries on the acceptance of the applications.
NSE’s IPO has been on hold since 2016. Once the NOC is received, NSE is expected to file its prospectus with the regulator. The price of unlisted NSE shares has surged from ₹1,500 to ₹2,300 in the past three months on hopes of Sebi issuing an NOC for the proposed listing.
Another potential roadblock—Sebi's earlier insistence that stock exchanges must separate ownership of their clearing corporations—also appears to have been removed.
Sebi chairperson Tuhin Kanta Pandey said at a press conference on 24 June that the regulator had put the proposal on hold due to feasibility concerns. He also said the regulatory clearance for NSE’s listing was not contingent on these norms being implemented.
NSE Clearing Ltd (NCL) and Indian Clearing Corp. Ltd (ICCL), wholly owned subsidiaries of NSE and BSE respectively, handle trade settlements and provide counterparty risk protection. NCL clears over 95% of trades in the equity cash and equity derivatives segments in India, according to Ashishkumar Chauhan, managing director and chief executive, NSE, during the company’s March quarter earnings call.
“Even the clearing corporation hurdle has been put aside," said the person cited earlier.
The co-location case stems from allegations dating back to 2015, when whistleblowers claimed some brokers received preferential access to NSE’s trading systems by logging in early at its co-location facility. The system allowed these brokers to gain a trading advantage by receiving market data fractions of a second ahead of others.
In 2019, Sebi issued multiple enforcement orders against NSE, its former officials, and brokers including OPG Securities. However, in September 2024, the regulator said it had found insufficient evidence of collusion between NSE and OPG.
The dark fibre case involved allegations that certain brokers accessed NSE’s co-location systems via faster, unauthorized fibre-optic lines. The regulator had imposed a ₹7 crore penalty on NSE in 2022, which was later overturned by the Securities Appellate Tribunal after NSE challenged it.
Sebi has since filed two appeals in the Supreme Court—in September 2023 and again in February 2024—against the SAT order. These appeals are still pending, and NSE has been asked to respond.
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