The National Stock Exchange (NSE) has secured approval from the Securities and Exchange Board of India (SEBI) to proceed with its public offering, marking a significant regulatory milestone for India's leading stock exchange.

Regulatory Approval Received

SEBI has granted NSE the necessary clearance to move forward with its initial public offering plans. This approval represents a crucial step in the exchange's journey toward becoming a publicly listed entity.

LIC's Stake Sale Uncertainty

Life Insurance Corporation of India (LIC), a key stakeholder in NSE, has indicated uncertainty regarding its participation in the upcoming IPO. A company executive stated that LIC has not made up its mind on how much stake it will offload in the NSE public offering.

Leadership Response

The NSE chairperson has expressed satisfaction and joy over receiving the IPO green light from the market regulator. This positive response from the exchange's leadership reflects the significance of this regulatory milestone.

Market Significance

The approval allows NSE to advance its public offering preparations, bringing the exchange closer to its public listing goals. However, LIC's undecided stance on stake divestment adds an element of uncertainty to the IPO process. This development is notable given NSE's position as one of India's premier stock exchanges.

India's market regulator Sebi has given in-principle approval to NSE's settlement application in the long-running unfair market access case, clearing a major regulatory hurdle for the country's largest stock exchange's IPO plans. The development represents the strongest signal yet that NSE may finally move closer to its long-awaited public listing after years of delays.

Regulatory Breakthrough Paves Way for IPO

Sebi Chairman Tuhin Kanta Pandey confirmed on Thursday that the regulator has accepted NSE's settlement proposal at the in-principle stage. The government has also approved a 2.5% stake dilution in the exchange, with a notification expected soon. Pandey indicated that a no-objection certificate (NOC) for the public offer would be issued later this month.

NSE is currently in discussions with investment bankers and law firms to finalize the prospectus and assess investor appetite for what could become one of India's largest IPOs. Formal appointments of advisers are expected after Sebi issues the NOC.

Long Journey Toward Public Listing

The world's largest derivatives exchange by volume has been attempting to go public since 2016. Its listing plans faced repeated delays due to regulatory investigations into fair market access through co-location facilities and broader governance concerns. Last year, NSE offered to settle the case by paying ₹1,387.00 crore, which Sebi has been evaluating.

The regulatory environment has become more favorable following Sebi's 2024 decision to reduce minimum public float requirements for very large companies. Entities valued above ₹5.00 lakh crore post-listing can now dilute just 2.5% of equity, compared to the earlier 5% requirement.

Market Response and Valuation Surge

Regulatory clarity has reignited strong interest in NSE shares in unlisted and grey markets. Over recent days, NSE's unlisted share prices have risen approximately 10-15% as investors rushed to gain exposure ahead of the potential IPO.

Tejas, Vice President–Marketplace at Qapita, noted that the exchange operates in a near-duopoly market with high entry barriers across regulation, technology, and capital. The renewed regulatory momentum has prompted buyers to step in, pushing unlisted prices higher.

Complex Shareholder Structure Adds Challenges

NSE's unusually large shareholder base of around 1,77,807 shareholders makes it India's largest unlisted company by number of investors. Lawyers working on the IPO are expected to design mechanisms ensuring fair exit opportunities for this wide shareholder base, with priority likely given to long-term institutional investors such as banks and foreign funds. The matter remains pending before the Supreme Court, though the settlement proposal represents significant progress toward resolution.