NSE IPO Gets SEBI Nod: A Look at the ₹5 Lakh Crore Listing

Introduction

The National Stock Exchange (NSE) has received a no-objection certificate from the Securities and Exchange Board of India (SEBI) for its much-anticipated Initial Public Offering (IPO). This approval marks a significant milestone for India's largest stock exchange, advancing its plans for a public listing after nearly a decade of delays and regulatory challenges. The development moves the exchange closer to what could be one of the largest IPOs in the country's history.

A Decade-Long Wait

The journey toward an IPO has been a long one for the NSE. The exchange first filed its draft listing documents in 2016 but had to withdraw the application due to regulatory investigations. The primary hurdles were probes related to its co-location facility and dark fibre network, where it was alleged that certain brokers were given unfair preferential access to the exchange's trading systems. These controversies stalled the listing plans for years as the matter went through various legal and regulatory channels, including the Supreme Court.

Clearing Regulatory Hurdles

A crucial step in clearing the path for the IPO was the exchange's effort to settle the outstanding regulatory cases. In 2025, the NSE filed a settlement application with SEBI, offering to pay approximately ₹1,400 crore to resolve the co-location and dark fibre matters. In its financial results for the second quarter of FY26, the exchange made a provision of ₹1,297 crore for this purpose. This move signalled a commitment to resolving past issues and was instrumental in securing the regulator's approval to proceed with the listing process.

Valuation and Financial Strength

Based on trading in the unlisted market, the NSE's valuation is estimated to be around ₹5 lakh crore ($15 billion). This valuation is derived from its 247.5 crore outstanding shares trading at approximately ₹2,000 per share. A listing at this valuation would place the NSE among the top 15 most valuable companies in India. The exchange has demonstrated strong financial performance, although recent quarters have been impacted by one-time provisions.

Unmatched Market Dominance

The NSE holds a commanding position in the Indian capital markets. It is the world's largest derivatives exchange by trading volume and maintains a near-monopoly in several segments domestically. The exchange has a 94% market share in cash equities, 99% in equity index futures, and 88% in equity index options. This dominant position translates into significant and consistent profitability, far surpassing its listed peer, the BSE.

A Broad and Growing Shareholder Base

Even as an unlisted company, the NSE has a vast shareholder base of approximately 1.91 lakh investors. This base has seen an unprecedented surge in retail participation recently. The number of retail shareholders quadrupled in just three months, from around 34,000 in March 2025 to over 146,000 in June 2025. This growth was fueled by the removal of an ISIN freeze, which simplified the process of trading NSE shares in the unlisted market. Prominent shareholders include the Life Insurance Corporation (LIC) with a 10.72% stake, and notable investors like Radhakishan Damani.

The Road Ahead

With SEBI's no-objection certificate in hand, the NSE is expected to move forward with filing its Draft Red Herring Prospectus (DRHP). Reports suggest the exchange plans to file the documents by the end of March. The entire process, from filing the DRHP to the final listing, could take between eight to ten months. The IPO will be an Offer for Sale (OFS), where existing shareholders will sell their stakes to the public. The exchange itself will not raise fresh capital. As self-listing is not permitted in India, the NSE will list its shares on another exchange, likely the BSE.

Conclusion

The regulatory green light for the NSE's IPO is a landmark development for the Indian financial markets. After years of being stalled, the path is now clear for the exchange to make its public debut. The focus will now shift to the formal IPO process, which will be closely watched by investors across the spectrum. The listing is poised to unlock significant value for its existing shareholders and will be a major event in the Indian stock market.