The National Stock Exchange of India (NSE) has received a no-objection certificate from the Securities and Exchange Board of India (SEBI) to proceed with its long-delayed initial public offering, according to sources familiar with the matter.
The clearance from SEBI’s Market Regulation Department (MRD) ends a years-long regulatory deadlock, allowing the world’s largest derivatives exchange by volume to begin formalizing its Draft Red Herring Prospectus (DRHP). Market estimates suggest a listing could materialize within eight to nine months, potentially valuing the exchange at approximately ₹5 trillion ($59.6 billion).
Regulatory Path Cleared via Consent Mechanism
The issuance of the NOC follows a strategic shift in SEBI’s handling of the exchange’s legacy legal hurdles. While a final nod from the High Powered Advisory Committee (HPAC) on Settlement was previously considered a prerequisite, SEBI’s internal departments granted the NOC on an “in-principle” basis to expedite the filing process.
The settlement pertains to the high-profile co-location and “dark fibre” cases, where it was alleged that certain high-frequency traders gained unfair latency advantages. To resolve these probes, the NSE has agreed to a settlement package totaling approximately ₹1,400 crore.
Financial Provisions for Settlement:
• Existing Deposit: ₹100 crore (per 2023 SAT order).
• New Provision: ₹1,297 crore (allocated in November 2025 financial results).
• Total Expected Outlay: ~₹1,400 crore, subject to a 12% annual interest accrual until the final settlement date.
The matter will now move to the HPAC and a panel of two SEBI Whole Time Members (WTMs) for final ratification. Upon approval, SEBI is expected to seek the withdrawal of related litigation currently pending before the Supreme Court.
Structure of the Offering
The upcoming IPO will be structured strictly as an Offer for Sale (OFS). Under this mechanism, existing shareholders—which include domestic banks, insurance companies, and foreign private equity firms will trim their stakes.
The NSE originally filed for an IPO in 2016 but was forced to withdraw the application as the co-location probe intensified. Despite the regulatory overhang, the exchange’s private market valuation has remained robust, driven by a surge in retail participation in the Indian derivatives market.
Market Context and Valuation
The projected ₹5 trillion valuation places the NSE among the most valuable market infrastructure institutions globally. For the fiscal year ending March 2025, the exchange reported significant growth in operational revenue, underpinned by its dominance in the equity and options segments.
Legal experts noted that the decision to settle was likely a pragmatic move to satisfy shareholder demands for an exit. While the Securities Appellate Tribunal (SAT) had previously ruled in favor of the NSE on several counts, the exchange’s board opted for the consent mechanism to eliminate the “regulatory discount” applied to its shares in the unlisted market.
Timeline and Next Steps
With the NOC in hand, the NSE is authorized to engage merchant bankers and legal counsel to update its financial disclosures.
The exchange now faces the task of navigating a global macro environment characterized by shifting interest rate cycles and volatility in emerging market capital flows. However, as the gatekeeper to Indian capital markets, the NSE’s debut is expected to be the most significant domestic listing of the decade.
Kaashika is a social media strategist and financial content creator at Lakshmishree. She specialises in simplifying complex IPO and stock market concepts into clear, easy-to-understand content. Having created over 500+ pieces of financial content across reels, blogs, website posts and digital creatives, Kaashika helps audiences connect with the world of finance in a more accessible and engaging way.
