MUMBAI: The markets regulator Sebi has finally given its no-objection to the National Stock Exchange's mega initial public offering after a decade of waiting during which the exchange got into regulatory crosshairs many a time.
Regulatory clearance follows in-principle settlement of the long-pending colocation and dark fibre cases, paving the way for the exchange to file draft IPO papers.
The nation’s biggest exchange is currently valued at Rs 5 trillion in the unlisted market with one of the largest institutional and retail shareholding.
“We are delighted to receive Sebi approval for our IPO — a significant milestone in our growth journey. With the Sebi nod, we embark on a new chapter of value creation for all our stakeholders. This approval also reinforces confidence in NSE being an integral part of the Indian economy and beacon of Indian capital markets,” said Srinivas Injeti, the chairperson of the NSE.
The regulatory nod follows the resolution of several legal overhangs, including matters related to colocation and dark fibre, that have weighed on the exchange for over a decade. Sebi has agreed to the settlement in principle, with final terms expected after approval from its high-powered advisory committee, sources said.
According to sources, the exchange may file its draft papers by April-May this year, and the proposed issue is expected to be entirely an offer for sale.
The exchange recognised a provision of Rs 1,297 crore, including interest, towards the settlement of matters linked to colocation and dark fibre cases. The NSE had said this was over and above the Rs 100 crore penalty imposed by the Securities Appellate Tribunal (SAT) in the colocation case, which had already been adjusted against amounts deposited with Sebi in FY23.
The NSE reported a consolidated net profit of Rs 2,098 crore in the second quarter of this fiscal, sharply lower than Rs 3,137 crore a year earlier, primarily due to one-time provisioning related to settlement applications filed with Sebi.
Consolidated revenue from operations declined nearly 18 percent on-year to ₹3,676.8 crore. Revenue from transaction charges fell 22 percent to Rs 2,785 crore, reflecting lower volumes across both cash and derivatives segments.
The colocation case, currently pending before the Supreme Court, pertains to allegations that certain brokers received preferential access to NSE’s trading servers between 2015 and 2016. Once Sebi formally clears the settlement, it will be required to file an affidavit in the apex court seeking withdrawal of its appeal.
In January 2023, SAT upheld non-monetary penalties against the NSE but set aside the disgorgement order, instead imposing a fine of about ₹100 crore for lapses in due diligence. Later that year, the Supreme Court directed Sebi to refund around Rs 300 crore to the NSE in connection with the matter.
Despite being unlisted, the NSE already boasts of a large retail shareholder base. The number of retail shareholders of the exchange stood at 171,563 as of December 2025, collectively holding about 12.3 per cent of the exchange.
Sebi chairman Tuhin Kanta Pandey has been repeatedly saying that the NSE issue was one of his top priorities.
The source also said the exchange, headed by Ashish Chauhan, who previously headed the rival BSE and took it public, is likely to file formally for the public issue early March and is also in discussions with investment bankers and law firms to finalise the prospectus and assess investor appetite.
The NSE listing is expected to attract strong attention from investors because of the its dominant role in the stock and derivatives markets and its wide shareholder base across institutions and retail investors.
The NSE, the world's largest derivatives exchange by trading volume commanding over 95% of the cash volume market, was trying for a listing since 2016. However, the plan was held up due to regulatory probes linked to its co-location facility and broader governance issues which led to the unceremonious exit of its past chief executive Chitra Ramakrishna. The case is still pending before the Supreme Court.
The regulatory regime has also become more supportive under the new chairman who has relaxed the public float norms for very large issues. For instance, a company with a post listing valuation of Rs 5 trillion need not make 5% public float at the beginning but only 2.5% and then gradually reduce the promoter holding to 25% over the next five years. The move is intended to make it easier for large platforms, including stock exchanges, to tap public markets.
Speculation around the NSE issue has pushed up demand for its shares in the unlisted market, with prices rising about 10-15% over the past two months. The NSE also stands out for its unusually large shareholder base for an unlisted company, with about 1,77,807 investors, making it the most widely held unlisted firm in the country.