NSE Seeks SEBI Approval Again for IPO Clearance
The National Stock Exchange (NSE) has once again approached the Securities and Exchange Board of India (SEBI), requesting a No Objection Certificate (NOC) to move forward with its long-pending initial public offering (IPO). According to sources, the exchange has submitted a detailed response addressing all the concerns raised by the regulator.
Importance of the NOC and IPO Delay
The NOC is a critical requirement for NSE to proceed with its IPO, which has been stuck for over eight years.
- NSE originally filed its draft red herring prospectus (DRHP) in December 2016, but regulatory hurdles have delayed its listing.
- In a letter dated March 28, NSE formally requested SEBI’s permission to resume IPO-related processes, including filing the DRHP again.
The letter was sent to VS Sundarasan, Executive Director, Market Regulation Department, SEBI, highlighting NSE’s compliance with regulatory norms.
NSE’s Ongoing Requests for NOC
This is not the first time NSE has sought an NOC from SEBI for its IPO.
- The exchange had previously submitted similar requests in November 2019, twice in 2020, and again in August 2024.
- SEBI responded on February 28, 2025, pointing out concerns related to technology, key management personnel (KMP), clearing corporation ownership, and pending legal cases.
In its fresh appeal, NSE has addressed each of SEBI’s concerns, reinforcing its commitment to regulatory compliance.
Ownership of NSE Clearing and SEBI’s Concern
A key issue raised by SEBI is NSE’s majority stake in its clearing corporation, NSE Clearing Ltd (NCL).
- SEBI emphasizes that clearing corporations should function independently, especially given the interoperability between exchanges.
- NSE, however, maintains that its ownership complies with regulations, citing BSE and MCX, which also have wholly-owned clearing subsidiaries.
- NSE added that if ownership rules change, the risks can be disclosed in the DRHP.
Additionally, NSE believes that diversifying NCL’s ownership would reduce its capital burden and improve the exchange’s financial reserves.
Strengthening Technology Infrastructure
SEBI had also raised technology-related concerns, to which NSE responded by highlighting its significant upgrades in recent years.
- NSE stated that there have been no major outages in the last four years, demonstrating improved system resilience.
- Out of 82 recommendations from McKinsey in 2022, 65 have been implemented, 9 were dropped by the exchange’s tech panel, and 8 are still in progress.
These improvements are aimed at enhancing operational stability and investor confidence.
Key Management Personnel (KMP) and Workforce Expansion
On the KMP issue, NSE provided data on its expanding workforce.
- The total number of employees grew from 1,115 in FY23 to 1,673 in FY25.
- Staff in critical operations increased from 332 in FY23 to 590 in FY25, ensuring better risk management.
- The regulatory, compliance, and risk management team saw an increase from 486 in FY23 to 710 in FY25, reflecting NSE’s focus on governance.
Addressing Pending Legal Cases
Regarding ongoing legal matters, NSE reiterated its willingness to resolve issues through a settlement mechanism.
- The governing board reaffirmed its intent to settle all pending disputes, including those before SEBI and judicial forums.
- A formal settlement request was sent to SEBI in August 2024, signaling NSE’s commitment to regulatory compliance.
SEBI’s Response Still Awaited
While Moneycontrol has sought SEBI’s comments on NSE’s latest request, a response is still pending.
- NSE, in an emailed statement, declined to comment on the issue.
- The final SEBI decision will determine whether NSE can proceed with its long-awaited IPO.
The developments indicate that NSE is actively addressing regulatory concerns, but the final SEBI approval remains a crucial hurdle.
