NSE IPO Gets Sebi Nod: Biggest Exchange to File DRHP Soon

The National Stock Exchange of India (NSE) has received a no-objection certificate (NOC) from the Securities and Exchange Board of India (Sebi), clearing a significant hurdle in its path toward a long-anticipated initial public offering (IPO). Currently valued at ₹5 trillion in the unlisted market, the NSE is poised to file draft documents for the IPO following this regulatory approval.

Regulatory Approval and Past Challenges

Srinivas Injeti, chairperson of the NSE, expressed enthusiasm about Sebi’s approval, calling it a “significant milestone” and a reinforcement of the exchange’s integral role in the Indian economy. The NOC follows the resolution of legal issues that have impacted the exchange for over a decade, specifically those related to colocation and dark fibre practices.

Settlement and Financial Impact

Sources indicate that Sebi has agreed to a settlement in principle, with final terms pending approval from its high-powered advisory committee. The NSE has already recognized a provision of ₹1,297 crore, including interest, to cover settlements related to these cases, in addition to a ₹100 crore penalty previously imposed by the Securities Appellate Tribunal (SAT).

Did You Know? As of December 2025, the NSE has a substantial retail shareholder base, with 171,563 individual investors collectively holding approximately 12.3 per cent of the exchange.

Future IPO Plans and Recent Performance

The exchange anticipates filing its draft red herring prospectus (DRHP) between April and May of this year. The proposed IPO is expected to be an entirely offer-for-sale, meaning existing shareholders will be selling their stakes. Despite the progress toward the IPO, the NSE’s recent financial performance has been affected by provisioning for the settlement with Sebi.

In the second quarter of 2025-26 (Q2FY26), the NSE reported a consolidated net profit of ₹2,098 crore, a decrease from ₹3,137 crore in the same period the previous year. Consolidated revenue from operations also declined, falling nearly 18 per cent year-on-year to ₹3,676.8 crore, with transaction charges dropping 22 per cent to ₹2,785 crore due to lower trading volumes.

Expert Insight: The resolution of the colocation and dark fibre cases represents a critical step for the NSE, removing a significant overhang that has likely dampened investor sentiment and valuation for years. Securing the NOC from Sebi allows the exchange to move forward with its IPO plans, potentially unlocking value for existing shareholders and providing new investment opportunities.

Ongoing Legal Proceedings

The colocation case, which involves allegations of preferential access to trading servers for certain brokers between 2015 and 2016, remains before the Supreme Court. Once Sebi formally approves the settlement, it will seek to withdraw its appeal from the apex court.

Frequently Asked Questions

What is a No-Objection Certificate (NOC)?

An NOC from Sebi is a regulatory requirement for regulated entities like the NSE before they can file for an IPO. It signifies that the regulator has no objections to the exchange proceeding with the public offering.

What is an offer-for-sale IPO?

An offer-for-sale IPO means that existing shareholders of the NSE will sell their shares to the public, rather than the company issuing new shares to raise capital.

What were the colocation and dark fibre issues?

The colocation case pertains to allegations that certain brokers received preferential access to the NSE’s trading servers between 2015 and 2016. Dark fibre relates to dedicated communication links, and the issues involved concerns about fair access and potential advantages given to certain parties.

As the NSE prepares to file its DRHP, will the successful completion of its IPO depend on broader market conditions and investor appetite?