The National Stock Exchange (NSE) has offered to pay Rs 1,388 crore to the Securities and Exchange Board of India (Sebi) to settle the colocation and dark fibre cases, potentially clearing the way for its much-awaited initial public offering (IPO).
This is the biggest-ever settlement plea made with the markets regulator.
If approved by the regulator, it will pave the way for the listing of the country’s largest stock exchange riddled with delays due to regulatory and legal hurdles.
The exchange filed its settlement application with Sebi on June 20.
“The settlement amount aligns with Sebi’s regulations, and approval is expected soon, expediting the IPO process.
The exchange has set eyes on concluding the IPO this financial year,” a person familiar with the matter said.
Queries sent to Sebi and NSE remained unanswered till the time of going to press.
NSE is awaiting a no-objection certificate from Sebi to proceed with its draft IPO filings.
Sebi chairman Tuhin Kanta Pandey recently hinted at the impending settlement, stating that no further obstacles remain for the IPO.
The colocation issue, currently before the Supreme Court, pertains to allegations that certain brokers received preferential server access at NSE between 2015 and 2016.
If Sebi approves the settlement, it will need to file an affidavit in the Supreme Court to withdraw its appeal.
In January 2023, the Securities Appellate Tribunal (SAT) upheld non-monetary penalties in the case but set aside a disgorgement order, instead imposing a Rs 100 crore fine on NSE for due diligence lapses.
Later that year, the Supreme Court directed Sebi to refund Rs 300 crore to NSE related to the case.
NSE had previously deposited Rs 1,108 crore with Sebi in 2019 as part of penal actions. Sources indicate nearly Rs 1,000 crore remains in an escrow account.
In October 2023, NSE, former CEO Vikram Limaye, and eight others settled a separate case involving misuse of trading access points (TAP) for Rs 643 crore.
Sebi also dropped charges against NSE and former executives in the colocation matter, citing insufficient evidence of collusion with OPG Securities.
NSE’s unlisted shares have surged 87 per cent in the past year, currently trading at Rs 2,325 apiece, reflecting strong investor interest.
The country's largest bourse is currently valued at nearly Rs 6 trillion, dwarfing the valuations of several listed firms.
“From a market perspective, this resolution brings much-needed clarity and signals NSE’s intent to prioritise governance and compliance.
"With this issue behind them, the path is now clearer for the exchange to move toward a public listing, and investor interest is likely to revive given NSE’s strong fundamentals and dominant market position,” said Mrugank Paranjape, chairman, IMC Task Force on Capital Markets and managing partner, MCQube.
Sebi has previously raised concerns about the independence of clearing corporations, emphasising public interest over commercial priorities.
A working group is now reviewing fee structures to ensure sustainability.
NSE may explore listing on the BSE or the Metropolitan Stock Exchange (MSEI), as self-listing is currently barred under Sebi rules.
The country's solely listed equity bourse BSE is exclusively listed on the NSE.
“Under Sebi regulations, stock exchanges in India are not allowed to self-list to avoid conflicts of interest and ensure regulatory integrity.
"As a result, NSE cannot list on its platform and will need to seek a listing on a competing exchange like BSE or MSEI,” said Uday Tardalkar, economist and a market expert.
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