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NSE's ₹1,388-cr settlement plea could pave way for IPO this fiscal

The National Stock Exchange (NSE) has agreed to settle the long-pending colocation and dark fibre case with the Securities and Exchange Board of India (Sebi) for ₹1,388 crore — a move seen as crucial for advancing its initial public offering (IPO). Sources indicate that this settlement — the biggest ever, and the second such resolution for NSE — clears a major hurdle for its much-anticipated listing. The exchange filed its settlement application with Sebi on June 20. 'The settlement amount aligns with Sebi's regulations, and approval is expected soon, expediting the IPO process. The exchange has set its sights on concluding the IPO this fiscal,' said a person familiar with the matter. Queries sent to Sebi and the BSE remained unanswered. NSE is awaiting a no-objection certificate from Sebi to proceed with its draft IPO filings. Sebi Chairman Tuhin Kanta Pandey recently hinted at the impending settlement, stating that no further obstacles remain for the IPO. The colocation issue, currently before the Supreme Court, pertains to allegations that certain brokers received preferential server access at NSE between 2015 and 2016. If Sebi approves the settlement, it will need to file an affidavit in the Supreme Court to withdraw its appeal. In January 2023, the Securities Appellate Tribunal (SAT) upheld non-monetary penalties in the case but set aside a disgorgement order, instead imposing a ₹100 crore fine on NSE for due diligence lapses. Later that year, the Supreme Court directed Sebi to refund ₹300 crore to NSE related to the case. NSE had previously deposited ₹1,108 crore with Sebi in 2019 as part of penal actions. Sources indicate nearly ₹1,000 crore remains in an escrow account. In October 2023, NSE, former chief executive Vikram Limaye, and eight others settled a separate case involving misuse of trading access points (TAP) for ₹643 crore. Sebi also dropped charges against NSE and former executives in the colocation matter, citing insufficient evidence of collusion with OPG Securities. NSE's unlisted shares have surged 87 per cent over the past year, currently trading at ₹2,325 apiece, reflecting strong investor interest. The country's largest bourse is currently valued at nearly ₹6 trillion, dwarfing the valuations of several listed firms. 'From a market perspective, this resolution brings much-needed clarity and signals NSE's intent to prioritise governance and compliance. With this issue behind them, the path is now clearer for the exchange to move toward a public listing, and investor interest is likely to revive given NSE's strong fundamentals and dominant market position,' said Mrugank Paranjape, chairman, IMC Task Force on Capital Markets and managing partner, MCQube. Sebi has previously raised concerns about the independence of clearing corporations, emphasising public interest over commercial priorities. A working group is now reviewing fee structures to ensure sustainability. NSE may explore listing on the BSE or the Metropolitan Stock Exchange (MSEI), as self-listing is currently barred under Sebi rules. The country's only listed equity bourse, the BSE, is exclusively listed on the NSE. 'Under Sebi regulations, stock exchanges in India are not allowed to self-list in order to avoid conflicts of interest and ensure regulatory integrity. As a result, NSE cannot list on its own platform and will need to seek a listing on a competing exchange like BSE or MSEI,' said Uday Tardalkar, economist and market expert.