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The National Stock Exchange (NSE), which is the largest stock exchange in India is planning an IPO again. This is the 3rd time NSE is going to SEBI to launch an IPO after a long 8 years of regulatory battle.
The leading stock exchange has applied for a 'No Objection' certificate with the capital market regulator, hoping for an IPO in the next 1 year.
Current Status Of IPO
The NSE management has already reached SEBI. This request is followed by a hearing of a case in Delhi where SEBI told the court that there is no request from NSE for IPO.
After obtaining an NOC, the NSE will prepare a draft prospectus for filing with SEBI. Once SEBI approves, NSE will plan to launch an IPO.
What's the tussle between NSE & SEBI?
In 2015, NSE filed its draft papers with SEBI for its IPO. However, it got delayed due to its NSE irregularities. SEBI has raised certain governance issues for NSE. One of them included the co-location scam of 2015 where several algo traders rented out areas near the NSE servers. Thus getting an upper edge in wrongfully obtaining prior information and then picking up large chunks of money in trading.
After being alerted, SEBI investigated the facts and found that NSE had violated several provisions of the SEBI Act and the Stock Exchanges and Clearing Corporations (SECC) Regulations. In 2019, SEBI passed an order stating the disgorgement of money and directed NSE to pay Rs 625 crore along with interest plus a penalty of Rs 100 crore.
The NSE challenged this order in higher courts. In the end, the Supreme Court gave partial relief to NSE by ordering SEBI to pay Rs 300 crores back to NSE. However, the Rs 100 crore penalty imposed remains valid. Additionally, NSE will have to wait for SEBI’s appeal against the NSE’s order challenging the set of disgorgement orders.
SEBI took time to gauge NSE’s credibility.
In 2019, after the whole co-location scam came out, SEBI banned NSE executives, namely Chitra Ramkrishna and Ravi Narain for putting in place such networks which allowed unfair access to some network servers of the exchange. The Enforcement Directorate (ED) also arrested Chitra Ramkrishna, in the phone tapping case.
Since then NSE has been striving to regain the lost credibility. The exchange went on to address their issues proactively and took several measures for the co-location issue. They also took steps to improve their systems and processes for better governance.
How are the financials of NSE performing?
The NSE reported an 8% year-on-year rise from its December quarter to Rs 1975 crore, the consolidated revenue from operations also grew by 25% year on year to Rs 3517 crore.
Not just the trading revenue, NSE also grew in providing other services like data center and connectivity charges, clearing services, listing services, index services, and data services.
Hence the net profit margins for Q3FY 24 stood at 51%. As of December 31, 2023, about 55.51 percent of NSE’s shareholding was with the public, while the rest is owned by non-public.
Also Read: NSE Crosses 10 crore Unique Investor Mark
How can you purchase NSE shares?
Considering the conditions set up by NSE and the steps to be taken, the IPO may get delayed thereby making inventors lose out on holding and gaining from the listed shares in NSE. However, investors can still invest in NSE unlisted shares. At Stockify, we help you buy and sell unlisted shares of NSE and other blue chip companies that are not listed on the Indian stock exchange. Giving you an early mover advantage over other investors.
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