SEBI Grants NOC for NSE IPO, Paving Way for 2026 Listing

Introduction: A Milestone for India's Capital Markets

The Securities and Exchange Board of India (SEBI) has granted a No-Objection Certificate (NOC) for the National Stock Exchange's (NSE) long-awaited Initial Public Offering (IPO). This regulatory clearance marks a significant milestone, potentially ending a decade-long wait for the country's largest stock exchange to go public. The approval removes a critical roadblock that has stalled the listing process since 2016, setting the stage for one of India's most anticipated public issues.

The Regulatory Green Light

SEBI's decision to issue the NOC is the culmination of extensive regulatory reviews and corrective actions undertaken by the NSE. SEBI Chairman Tuhin Kanta Pandey confirmed that the regulator had agreed in principle to NSE's settlement proposal concerning legacy legal cases, a key precondition for the IPO's progress. This certificate is a mandatory requirement for any market infrastructure institution before it can file its Draft Red Herring Prospectus (DRHP) with the regulator. With the NOC in hand, the NSE can now formally begin the process of preparing its offer documents and engaging with investment bankers to structure the public issue.

Resolving Historical Hurdles: The Co-location Case

The primary reason for the IPO's prolonged delay was the regulatory investigation into the co-location and dark fibre cases. These cases involved allegations that certain brokers were given preferential access to NSE's trading servers between 2015 and 2016, creating an unfair advantage. The matter led to significant penalties and a regulatory directive that put the exchange's listing plans on hold. A major breakthrough occurred when NSE offered to settle the charges by paying approximately ₹1,388 crore. SEBI's in-principle acceptance of this settlement was instrumental in clearing the path for the NOC, demonstrating that the regulatory overhang from these issues has been substantially addressed.

Projected IPO Timeline and Next Steps

Following the receipt of the NOC, the NSE is expected to move swiftly towards listing. According to NSE's Managing Director and CEO, Ashishkumar Chauhan, the entire process from receiving the NOC to the final listing could take approximately seven to nine months. This timeline includes a period of up to four months for the preparation and filing of the DRHP. Once filed, the document will undergo a thorough review by SEBI, a process that typically takes another four months. Based on this schedule, the NSE could potentially launch its IPO in the second half of 2026, likely between September and October.

Financial Health and Market Valuation

Despite the regulatory challenges, the NSE remains a highly profitable entity with a dominant market position. In the unlisted market, the exchange is currently valued at nearly ₹5 lakh crore. However, its recent financial performance reflects the cost of resolving past issues. For the second quarter of FY26, NSE reported a consolidated net profit of ₹2,098 crore, a sharp decline from ₹3,137 crore in the same period a year earlier. This drop was primarily due to a one-time provision of ₹1,297 crore related to the settlement applications filed with SEBI. Consolidated revenue from operations also fell by nearly 18% year-on-year to ₹3,676.8 crore.

Market Impact and Investor Interest

The news of SEBI's approval has generated significant positive sentiment in the unlisted market, where NSE's shares have reportedly surged by 10-15% in a short period. The exchange's strong market position, characterized by a near-duopoly and high entry barriers, makes it an attractive investment. Furthermore, the NSE has an unusually large shareholder base for an unlisted company, with over 1.7 lakh investors. This widespread ownership adds a layer of complexity to the IPO process, as the exchange and its advisors will need to ensure a fair exit opportunity for this diverse group of shareholders.

A Supportive Regulatory Environment

The regulatory landscape has also become more conducive for large-scale IPOs. In 2024, SEBI eased its public float norms, allowing companies with a post-listing valuation exceeding ₹5 lakh crore to dilute just 2.5% of their equity, down from the previous requirement of 5%. This change was specifically designed to facilitate the listing of large infrastructure platforms like stock exchanges, making the process more manageable for an entity of NSE's scale.

Conclusion

The issuance of the NOC by SEBI marks a pivotal moment in the NSE's journey towards a public listing. After years of regulatory scrutiny and legal battles, the path is now clear for the exchange to tap the capital markets. The next major milestone will be the filing of the DRHP, which will provide investors with a detailed look into the exchange's operations, financials, and future strategy. As the process unfolds, the NSE IPO is set to become a landmark event, reflecting the maturity and growth of India's financial ecosystem.