NSE IPO: Sebi issues no-objection certificate

Sebi’s NoC puts an end to nine years of waiting for NSE’s initial public offering (IPO).

The Securities and Exchange Board of India (Sebi) has issued a no-objection certificate (NoC) for the public listing of National Stock Exchange of India Ltd (NSE), according to two people familiar with the matter.

The development puts an end to nine years of waiting for the initial public offering (IPO) of the country’s largest stock exchange.

The NoC was issued to NSE on Friday, said an NSE official on the condition of anonymity. The IPO will be an offer-for-sale, with existing shareholders offering parts of their stakes to the public.

Earlier in January, Tuhin Kanta Pandey, chief of the Securities and Exchange Board of India (Sebi), said the capital markets regulator was poised to give NSE the go-ahead by the end of the month.

The long wait

NSE’s IPO ran into hurdles following the dark fibre case, which centred on allegations that some high-frequency traders were given preferential access to the exchange’s co-location servers between 2010 and 2014. The use of faster private communication lines allegedly enabled these traders to execute orders before others.

In April 2019, Sebi ordered NSE to disgorge ₹62.58 crore in purported unlawful gains and prohibited certain senior officials from holding market-related positions.

In 2022, Sebi also levied a ₹7 crore penalty on the exchange, but this was later overturned by the Securities Appellate Tribunal. Sebi subsequently appealed the SAT ruling before the Supreme Court in September 2023 and again in February 2024.

Unlike regular listed entities, market infrastructure institutions, such as stock exchanges, depositories, and clearing corporations, must secure a no-objection certificate from Sebi before filing their draft red herring prospectus.

The valuation of NSE currently stands at ₹5.2 trillion based on its unlisted share price of ₹2105, according to InCred Money. According to Sebi’s new rules on minimum public shareholding, a company with a post-issue market cap of over ₹5 trillion can sell a 2.5% stake initially.

Based on the unlisted share price, a 2.5% stake divestment by public shareholders—NSE doesn’t have a promoter—amounts to ₹13,025 crore. NSE is almost five times the size of rival BSE, whose market cap stood at ₹1.13 trillion.