National Stock Exchange (NSE) MD and CEO Ashish Chauhan on Thursday described reports of SEBI’s in-principle clearance for the exchange’s long-awaited initial public offering (IPO) as “good news,” though he cautioned that the actual listing process will take several more months.
This comes after SEBI Chairman Tuhin Kanta Pandey earlier indicated that the regulator is in an advanced stage of issuing the No Objection Certificate (NOC) for the IPO, possibly within this month. “Possibly within this month,” Pandey had said, fueling expectations of progress on the listing front.
SEBI clearance not yet officially received
Even as reports suggest SEBI has agreed, in principle, to NSE’s settlement application in the unfair market access case—which had been a major hurdle for the IPO—Chauhan said the exchange had not officially received any communication from the regulator. “That’s good news, and we have not yet got the intimation,” he told ANI when asked about SEBI’s in-principle clearance. He added that only after SEBI formally issues the NOC will the exchange be able to file its Draft Red Herring Prospectus (DRHP).
The DRHP, which includes details on the company’s finances, future prospects, and business operations, is a prerequisite for raising funds through public share offerings. Chauhan explained that preparing the DRHP will take three to four months. “Then we’ll file with SEBI again. They have a process which takes two-three months at least, or sometimes four months. So it’s still seven-eight months away after the NOC is received,” he said.
NSE’s journey to regulatory clearance
NSE has been seeking approval for its public listing for several years amid governance concerns and scrutiny over the co-location controversy, the exchange initially filed its DRHP in December 2016, but regulatory challenges and allegations of unfair access to its algorithmic trading platform delayed the process.
In August 2024, NSE reapplied to SEBI for the NOC. Two months later, in October 2024, the exchange settled the Trading Access Point (TAP) Architecture and Network Connectivity case by paying a penalty of Rs 643 crore to SEBI, which had found deficiencies in the exchange’s handling of high-frequency trading irregularities.
SEBI considers regulating unlisted share market
Separately, SEBI is exploring the possibility of regulating India’s unlisted share market, which currently operates outside its direct oversight. Speaking at the Association of Investment Bankers of India’s annual convention, Pandey said discussions are ongoing with the Ministry of Corporate Affairs. “SEBI first needs to examine whether it has the legal authority to regulate companies that are not listed on stock exchanges and how far such regulation can extend,” he explained.
The unlisted market encompasses those shares that are not traded on any of the stock exchanges and are often obtained through private transactions, employee stock option plans, or brokers. Information regarding the financial stability of such companies is, in most cases, only limited or delayed to the investors in this segment.
“Prices agreed upon in private deals often do not match the prices discovered during the IPO book-building process, creating confusion and potential risks for investors,” Pandey noted. He clarified that rules applicable to listed companies cannot be directly applied to unlisted firms.
Regarding the NSE IPO, Pandey said SEBI is currently reviewing the exchange’s settlement application. “In principle, SEBI agrees with the settlement and the matter is being examined by different committees,” he added.
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