SEBI to Approve NSE IPO by January 2026 After Decade-Long Delay

Introduction

The Securities and Exchange Board of India (SEBI) is set to approve the long-awaited Initial Public Offering (IPO) of the National Stock Exchange (NSE) by the end of January 2026. This move signals the potential end of a nearly decade-long wait for India's largest stock exchange to go public. SEBI Chairman Tuhin Kanta Pandey confirmed that the regulator is likely to issue a no-objection certificate (NOC) within weeks, a critical step that would allow the NSE to proceed with its listing formalities.

A Decade of Regulatory Hurdles

NSE's journey towards a public listing has been fraught with challenges since it first filed its draft red herring prospectus (DRHP) in December 2016. The process was stalled primarily due to serious allegations related to its co-location facility. Regulators initiated investigations into claims that certain brokers were given preferential access to NSE's algorithmic trading platform, providing them an unfair advantage. These governance lapses, along with other technology-related concerns, created significant regulatory roadblocks that delayed the IPO for years.

Clearing the Path with a Major Settlement

In a significant move to resolve these legacy issues, the NSE has taken decisive steps to clear the regulatory overhang. The exchange has filed settlement applications with SEBI and earmarked approximately Rs 1,300 crore to settle the pending co-location and dark fibre cases. This provision, recognized in its recent quarterly earnings, demonstrates NSE's commitment to addressing the regulator's concerns and moving forward with the listing. The settlement is seen as the final major hurdle being cleared, paving the way for the much-anticipated IPO.

Financial Impact of the Settlement Provision

The decision to provide for the settlement has had a noticeable impact on the exchange's recent financial performance. For the second quarter of fiscal year 2026, NSE reported a significant drop in profitability due to this one-time charge. The provision was a key factor in the exchange's reported financials, highlighting the material cost of resolving the long-standing regulatory disputes.

Excluding the settlement charge, the exchange's adjusted profit showed a healthy 16% quarter-on-quarter growth, indicating strong underlying operational performance. However, consolidated income and transaction charge revenues declined, partly due to a slowdown in trading volumes amid regulatory measures aimed at cooling the derivatives market.

The Road Ahead: IPO Timeline

With the NOC from SEBI expected shortly, the focus now shifts to the subsequent steps in the IPO process. Ashishkumar Chauhan, the Managing Director and CEO of NSE, has outlined a potential timeline for the listing. He indicated that once the exchange receives the NOC, it would take approximately 8 to 10 months to complete the necessary procedures and launch the IPO. This timeline suggests a potential listing in the next Samvat, 2082, subject to final approvals and market conditions.

Broader Regulatory Environment

The impending approval for the NSE IPO comes as SEBI is actively working on several other market reforms. The regulator has been cracking down on unregistered 'finfluencers', removing nearly 100,000 videos offering unauthorized stock tips using an AI-based tool. SEBI is also working on simplifying Know Your Customer (KYC) norms for retail and NRI investors to enhance market participation. However, plans for an immediate implementation of a T+0 settlement cycle have been put on hold due to implementation challenges.

Market Implications of the Listing

The listing of the National Stock Exchange is a landmark event for India's capital markets. As the country's largest bourse and the world's most active derivatives exchange, its IPO is expected to attract significant investor interest. The listing will enhance corporate governance and transparency at the exchange. Since SEBI regulations bar self-listing, NSE will likely list on a rival platform such as the BSE, creating a unique dynamic in the market. The resolution of its regulatory issues and its eventual public debut are expected to bolster investor confidence in the Indian financial ecosystem.

Conclusion

After years of delays, the National Stock Exchange is finally on the verge of its public listing. SEBI's expected approval by the end of January 2026 marks a pivotal moment, made possible by NSE's proactive measures to settle long-standing regulatory cases. While the settlement has impacted short-term profits, it clears the path for a much larger strategic goal. Investors and market participants will now be closely watching for the formal NOC, which will kickstart the final 8 to 10-month countdown to one of India's most anticipated IPOs.