NSE IPO Gets SEBI Green Light After Decade-Long Wait

Introduction: A Landmark Approval

The Securities and Exchange Board of India (SEBI) has granted a No-Objection Certificate (NOC) for the National Stock Exchange's (NSE) proposed initial public offering (IPO). This approval marks a pivotal moment, clearing a significant regulatory hurdle that has stalled the public listing of India's largest stock exchange for nearly a decade. The decision paves the way for the NSE to initiate the formal process of launching one of the most anticipated public issues in the history of Indian capital markets.

A New Chapter for NSE

Following the announcement, NSE Chairperson Shri Srinivas Injeti expressed optimism, stating, “We are delighted to receive SEBI approval for our IPO, a significant milestone in our growth journey. With SEBI’s approval, we embark on a new chapter of value creation for all our stakeholders.” The NOC allows the exchange to officially proceed with filing its Draft Red Herring Prospectus (DRHP). The IPO is expected to be structured as an Offer for Sale (OFS), allowing existing shareholders to sell their stakes without raising new capital for the company.

The Long Road to Listing

The primary cause for the prolonged delay in the NSE's listing plans, which were first initiated in 2016, was the regulatory investigation into the co-location and dark fibre cases. These cases involved serious allegations that certain brokers were given preferential and unfair access to NSE's trading servers, allowing them to execute trades faster than others. The subsequent regulatory probes and legal proceedings put the IPO plans on hold indefinitely, creating a long-standing overhang on the exchange.

Breakthrough Through Settlement

A major breakthrough came when the NSE moved to resolve these legacy issues. The exchange offered a settlement amount of approximately ₹1,400 crore to close the proceedings under SEBI's consent mechanism. In its financial statements for the second quarter of FY26, the NSE had already made a provision of ₹1,297 crore towards this settlement. SEBI's in-principle agreement to this settlement proposal was the key that unlocked the path for the issuance of the NOC.

Expected Timeline and IPO Structure

With the NOC now secured, the exchange is set to move forward with a clear timeline. NSE Managing Director and CEO Ashishkumar Chauhan indicated that the process from receiving the NOC to the final listing could take between eight to nine months. The exchange is expected to file its DRHP by April 2026, with a potential IPO launch around Diwali in November 2026. The public issue is likely to involve a dilution of around 2.5%, in line with recent SEBI regulations that eased public float norms for very large companies.

Market Valuation and Investor Interest

The news of SEBI's approval has already sparked significant activity in the unlisted market, where NSE shares have reportedly jumped by 10-15%. The exchange currently commands a valuation of approximately ₹5 lakh crore in the unlisted space, with shares trading near ₹2,050. The NSE has a uniquely large and diverse shareholder base for an unlisted entity, with over 1.7 lakh investors. Major institutional shareholders include Life Insurance Corporation (LIC), State Bank of India (SBI), and Stock Holding Corporation of India.

Financial Performance Snapshot

Despite the regulatory challenges, the NSE's operational performance remains strong. However, its recent financials reflect the impact of the one-time settlement provision. For the second quarter of FY26, the exchange reported a consolidated net profit that was significantly lower than the previous year due to this charge.

What Lies Ahead

The next steps for the NSE involve appointing merchant bankers and other advisors to prepare and file the DRHP. This document will provide a comprehensive overview of the exchange's operations, financial health, and the risks involved for potential investors. Once filed, the DRHP will undergo a thorough review by SEBI before the final approval for the IPO launch is granted.

Conclusion

The issuance of the NOC by SEBI is more than a procedural step; it is a landmark decision that closes a contentious chapter and opens a new one for the National Stock Exchange. As the exchange moves closer to its long-awaited market debut, all eyes will be on the DRHP filing. The successful listing of the NSE is poised to be a defining event for India's financial markets, reflecting the growth and maturation of the country's economic ecosystem.