Markets regulator, Securities and Exchange Board of India (SEBI) has agreed in principle to the National Stock Exchange’s settlement application in the unfair market access case, a move that clears a major regulatory hurdle for the bourse’s long-pending listing plans, SEBI Chairman Tuhin Kanta Pandey said on Thursday.
Pandey said the government has approved a 2.5 per cent stake dilution for the exchange and that a formal notification will be issued soon. He added that the appointment of bankers and legal advisers would follow once the Securities and Exchange Board of India (SEBI) issues a no-objection certificate (NOC).
The in-principle clearance is a key step forward for NSE, the world’s largest derivatives exchange, which has been attempting to go public since 2016. The IPO plans were repeatedly delayed due to pending legal proceedings and governance-related concerns, including the high-profile unfair market access case. NSE’s domestic rival, BSE Ltd, is already listed.
Market participants see the regulator’s move as a significant signal that long-standing issues around the exchange are nearing resolution. Final approval of the settlement and completion of procedural requirements would allow NSE to formally restart preparations for its initial public offering.
The development also comes in the backdrop of regulatory easing introduced last year, when SEBI reduced the minimum IPO float requirement for large companies. Under the revised rules, companies valued at over Rs 5 trillion after listing are permitted to dilute just 2.5 per cent of their paid-up capital, compared with the earlier requirement of 5 per cent. The change has helped facilitate listing plans for large entities, including Reliance Industries’ telecom arm Jio and the NSE.
With the settlement proposal now cleared in principle and the government’s nod for stake dilution in place, the focus will shift to regulatory formalities and adviser appointments, bringing NSE a step closer to what could be one of India’s most closely watched public listings.
Simpler IPOs and faster approvals
In a separate development, he Securities and Exchange Board of India (SEBI) is focusing on faster regulatory processes, simpler disclosures and optimal regulation to improve ease of doing business in the capital markets, SEBI chief Tuhin Kanta Pandey said at an AIBI event.
Speaking on foreign portfolio investors (FPIs), Pandey said FPIs are always on the lookout for good opportunities. He said India’s economy requires capital in all forms, and continued inflows remain important for market growth. On the IPO process, Pandey said companies will now be required to include a short and easy summary along with the draft offer document. This abridged prospectus will help investors understand key aspects of an IPO without going through lengthy and complex documents.
He said SEBI has developed a strong internal sense of urgency to clear documents at the earliest. According to him, a 30-day turnaround time in regulatory processes is critical to improving efficiency and predictability.
Pandey said SEBI is also focusing on faster disposal of offer documents to reduce delays and improve regulatory efficiency.
Referring to IPO-related checks, Pandey said SEBI’s examination has shown that due diligence during IPO processes has not always been impartial. This has prompted the regulator to sharpen its focus on disclosures.
On valuation, Pandey clarified that SEBI does not conduct any prior review of IPO valuations. He said the emphasis is on stronger disclosures so that investors are well informed and can make decisions based on adequate information.
Pandey said SEBI follows the principle of optimum regulation. The regulator aims to avoid micro-regulation while ensuring adequate supervision and improving ease of doing business.
He said SEBI is undertaking a comprehensive review of the Listing Obligations and Disclosure Requirements (LODR) regulations to remove repetitive or unnecessarily complex provisions, while retaining essential disclosures and investor safeguards.
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