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Once again, the National Stock Exchange (NSE) has approached the Securities and Exchange Board of India (SEBI) in a bid to obtain a No Objection Certificate (NOC) which will allow NSE to take steps towards listing its shares, something that has commercially eluded it thus far.
The NOC is needed for proceeding with NSE’s IPO, which has been put on hold for more than eight years. NSE filed the draft red herring prospectus (DRHP) for its IPO in December 2016.
“... we hereby submit this request letter to SEBI for seeking NOC/permission to take further actions towards listing of shares of NSE including filing the DRHP with SEBI,” said an NSE official on March 28.
V S Sundarasan, Executive Director, Market Regulation Department, SEBI has been sent the letter.
However, this is not the first letter, NSE being the largest exchange in IDN in terms of market share has previously sent for obtaining the NOC for their IPO as well. They had sent requests in November 2019, twice in 2020, and then again in August 2024.
On February 28, capital markets regulator responded to NSE’s letter asking for an NOC on technology, KMP, ownership of the clearing corporations, and the colocation matter. SSE gave NSE an answer, but not the one they were looking for.
While appealing for NOC again, NSE submitted the necessary materials that were requested.
In the SEBI communiqués, one of the more important points was also about the exchange's majority ownership in its clearing corporation, NSE Clearing Ltd, (NCL). In superintendent's thought, it is pivotal that clearing corporations are independent from exchanges, particularly when there is interoperability between exchanges.
On their side, NSE stated their rationale for his claim by saying that her shareholding in NCL is compliant to the existing regulatory regime. Further, there are already two listed exchanges BSE and MCX which have their clearing corporations as wholly owned subsidiaries. Further, she also mentioned in her testimony that any changes in ownership rules are potential changes that can be included in the risk factors in the DRHP which she is allowed to disclose.
NSE believes that if the clearing corporation is integrated, then the exchange will no longer need to capitalize the firm, which will enhance the exchange’s reserves.
Final guidelines for the separation of clearing houses from the exchanges has yet to be established by SEBI.
Shifting to the technology side, NSE has claimed that the exchange has made many investments to enhance the exchange's infrastructure and resiliency over the last few years. During this period, it has noted that there have been no major outages over the last four years.
In its letter to SEBI, NSE has further claimed that 65 out of 82 initiatives proposed by McKinsey in 2022 have been executed, while nine were discarded by the exchange’s technology expert panel, with the rest eight still being developed.
On the KMP issue, NSE has reported that the total headcount of the exchange has grown from 1,115 in FY23 to 1,673 in FY25 (current). The number of employees performing critical operations has gone up from 332 in FY23 to 590 in FY25, and the number of staff performing regulatory, compliance, risk management, and investor grievance functions has increased from 486 in FY23 to 710 in FY25.
Regarding the ongoing cases, NSE has mentioned that it is eager to complete all unresolved issues through a settlement method. It also added that its governing board has reconfirmed the will to resolve all issues and a letter was sent to SEBI in August last year in regards to settlement of all matters that are pending before SEBI and All judicial forums.
Moneycontrol has reached out to SEBI to ask about the latest correspondences from NSE and is yet to receive a reply, NSE has not made any official statements over the issue but, said in an email response that they are not going to comment about it for now.
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