SEBI Set to Approve NSE IPO, Ending a Decade-Long Wait

A Landmark Approval on the Horizon

The National Stock Exchange (NSE), India's largest bourse, is on the verge of receiving regulatory clearance for its much-anticipated Initial Public Offering (IPO). Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has indicated that the regulator is in the final stages of issuing a No-Objection Certificate (NOC), with a potential timeline of January 2026. This development marks a pivotal moment, signaling the potential end of a nearly decade-long wait that began when the exchange first filed its draft papers in 2016. The approval would remove the most significant regulatory obstacle that has stalled one of the most awaited public listings in Indian capital market history.

The Significance of SEBI's No-Objection Certificate

For market infrastructure institutions like stock exchanges, depositories, and clearing corporations, an NOC from SEBI is a mandatory prerequisite before filing a Draft Red Herring Prospectus (DRHP). This requirement underscores their critical role in maintaining the stability and integrity of the financial system. The NOC serves as a confirmation that the regulator is satisfied with the institution's governance, compliance, and operational frameworks. For NSE, securing this certificate is the definitive green light to formally reinitiate its IPO process, which has been in limbo due to prolonged investigations and regulatory concerns.

A Decade-Long Journey Marked by Hurdles

NSE's path to a public listing has been anything but smooth. The exchange initially filed its DRHP in December 2016, planning to raise approximately ₹10,000 crore. However, the process was derailed by serious allegations related to its co-location facilities. Whistleblower complaints brought to light claims that certain brokers were given unfair preferential access, allowing them to execute trades faster than others. This led to extensive regulatory probes into the co-location and dark fibre cases, resulting in significant penalties and a freeze on the IPO plans. The ensuing years were marked by legal challenges and a continuous dialogue with SEBI to address deep-rooted governance and technological concerns.

Resolving Legacy Issues: The Path to Clearance

In a concerted effort to move past these legacy issues, NSE has taken decisive steps to address SEBI's concerns. The exchange has filed settlement applications to resolve the pending co-location and dark fibre matters. A significant move was the provision of approximately ₹1,300 crore in its Q2 FY26 earnings specifically for this purpose. This followed a payment of ₹643 crore in October 2024 to settle a related case. These actions, coupled with a comprehensive overhaul of its management and board structure, demonstrated NSE's commitment to strengthening its compliance and governance frameworks, which SEBI Chairman Tuhin Kanta Pandey has acknowledged as crucial corrective steps.

Projected Timeline from Approval to Listing

With the NOC expected imminently, the focus now shifts to the subsequent steps. NSE's MD and CEO, Ashishkumar Chauhan, has outlined a potential timeline of eight to ten months from receiving the NOC to the actual listing. This process involves preparing and filing the DRHP, followed by a review period by the regulator.

NSE's Financial Strength and Market Position

The NSE stands as one of India's most profitable enterprises, holding a dominant position in the market. It is the world's largest derivatives exchange by volume and India's leading exchange in terms of trading volume. This strong market position translates into robust financials. Despite a one-time provision for the SEBI settlement impacting its recent quarterly results, the exchange's underlying operational performance remains strong. In the unlisted market, investor interest has propelled its valuation to an estimated ₹4.7 lakh crore, reflecting confidence in its business model and future growth prospects.

NSE vs. BSE: A Tale of Two Exchanges

The impending IPO brings NSE's valuation into sharp focus, especially when compared to its listed peer, the BSE. NSE's dominance in the high-volume derivatives segment gives it a significant lead in profitability and market capitalization.

Market Reaction and Investor Anticipation

The news of the impending NOC has already sparked a positive reaction in the unlisted market, with NSE's share prices reportedly rising by 10-15%. The IPO is highly anticipated by a wide range of investors, from institutional players to retail participants. The listing will not only provide an exit route for existing shareholders but also offer a unique opportunity for the public to invest directly in the country's primary capital market infrastructure. Since SEBI regulations prohibit self-listing, NSE is expected to list on the BSE, creating an interesting market dynamic.

Conclusion: The Final Countdown Begins

After years of regulatory scrutiny and internal restructuring, the National Stock Exchange is finally on the cusp of its public market debut. The expected issuance of the No-Objection Certificate from SEBI is the final and most critical milestone in this long journey. This development paves the way for the IPO process to formally commence, with a potential listing targeted for the latter half of 2026. The listing of NSE is poised to be a landmark event, enhancing transparency and governance while offering investors a stake in the engine of India's financial markets.