SEBI approval for NSE IPO soon; what it means for investors

New Delhi: The IPO of India's largest stock market index National Stock Exchange (NSE) seems to be coming soon. Market regulator SEBI may soon provide big relief for this much-awaited listing stuck for years. This is expected to end the long legal and regulatory uncertainty associated with the listing of NSE.

SEBI Chairman Tuhin Kant Pandey said during a press conference in Chennai that a No-Objection Certificate (NOC) can be issued to the NSE soon. He indicated that this approval could possibly be obtained by the end of this month. After this, it will depend upon NSE how it plans to proceed with the process of IPO.

NSE's IPO has been stuck for a long time due to the dark fibre case. In this case, there were allegations that between 2010 and 2014 some high-frequency traders were given preferential access to the co-location server through fast private connections, which gave them an unfair advantage in trading. In April 2019, SEBI had ordered the NSE to return the alleged illegal earnings of Rs 62.58 crore and banned some senior officers from performing market-related responsibilities. Apart from this, a penalty of Rs 7 crore was also imposed in 2022, which was later cancelled by the SAT. Against this, SEBI had moved to the Supreme Court, where the matter is still under consideration.

Market infrastructure entities like stock exchanges, depositories, and clearing corporations are required to obtain NOC from SEBI before an IPO. This additional process is maintained because these institutions are considered the backbone of the country's financial system.

According to InCred data, NSE's unlisted stock is trading at around Rs 2,045, which puts its estimated market cap at Rs 5.06 lakh crore. This is about five times more than the listed competitor BSE (about 1.09 lakh crore rupees). Talking about market share, NSE dominates 92.7 percent in the equity cash segment and 74.3 percent in equity options.

Apart from this, SEBI Chairman has also given important information about many other matters. One of them is T+0. SEBI Chairman agreed that there is no special enthusiasm in the market regarding the T+0 settlement system. India has already become the first country in the world to adopt a T+1 settlement for all shares in January 2023. In March 2024, SEBI had introduced alternative T+0 settlement for 25 shares and in December 2024 it was announced to increase it to top 500 shares in a phased manner. However, according to Pandey, there are more problems associated with this and the benefits seem limited.

This is also an important update for mutual fund investors. SEBI is going to implement a new framework for performance-linked expense ratio soon. Notification on this can be issued in a day or two. However, fund houses seem cautious about the uncertainty of calculations and fees in implementing it.

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Focus on corporate bonds and AI

SEBI is also considering bringing bond derivatives to deepen the corporate bond market. Along with this, regulatory reforms and awareness programs are being conducted to promote municipal bonds. SEBI is now increasingly using Artificial Intelligence (AI) for the safety of investors. 'SEBI Sudarshan System' is helping to identify fake consultants on social media. Besides this, AI tools are also being developed to analyze cyber audit reports.