National Stock Exchange of India Ltd, the country's largest exchange, is preparing to file its draft prospectus for its long-awaited public listing by the end of March, according to two people familiar with the matter. The move represents a significant step forward for what could become one of India's biggest initial public offerings.

IPO Preparation and Market Valuation

The exchange is currently in discussions with investment bankers and law firms to finalize the prospectus and assess investor appetite for the offering. While NSE has not disclosed the percentage of equity to be listed, market indicators suggest substantial investor interest.

Formal appointments of bankers and lawyers will follow receipt of a no-objection certificate from the Securities and Exchange Board of India (SEBI). Early discussions have already commenced, with SEBI's chairperson indicating the regulator could "possibly" grant required approval this month.

Regulatory Challenges and Settlement

India's biggest bourse and the world's most active derivatives exchange has been attempting to list since 2016. The listing approval has been delayed due to regulatory investigations into the exchange's conduct regarding fair market access for traders via co-location facilities.

NSE offered to settle the co-location matter by paying ₹1,387.00 crores ($154 million), with SEBI still considering the settlement proposal.

Complex Shareholder Structure

Pre-listing, NSE has 177,807 shareholders, making it India's largest unlisted company by number of investors. This extensive shareholder base adds complexity to the public listing process, with lawyers working on mechanisms to ensure fair exit opportunities.

Preference for exit opportunities is likely to be given to banks and foreign institutions that have held NSE shares for extended periods. The complex shareholder structure requires careful legal frameworks to manage the transition from unlisted to public status.

Market Position and Trading Activity

NSE's unlisted shares currently trade at over ₹2,000.00 per share on platforms like Unlisted Arena, which facilitates trading of unlisted securities. This valuation places the exchange at approximately ₹5,00,000 crores or $55 billion, significantly higher than its listed peer BSE Ltd, which trades at ₹2,767.00 per share.

The successful completion of NSE's IPO would mark a significant milestone for India's capital markets, bringing the country's largest exchange to public investors after years of regulatory scrutiny and preparation.

The National Stock Exchange of India's initial public offering appears to be nearing final approval after years of regulatory delays, with market regulator SEBI indicating clearance could come as early as this month. The development has generated renewed optimism in the financial markets as one of India's most anticipated listings moves closer to reality.

SEBI Signals Imminent Approval

Securities and Exchange Board of India chairman Tuhin Kanta Pandey confirmed that the regulator is at a "very advanced stage" of issuing a no-objection certificate for NSE's listing. While stopping short of providing a firm date, Pandey indicated the process could be completed within January, raising expectations that the long-standing regulatory overhang may finally be resolved.

The timing coincided with NSE Managing Director and CEO Ashish Kumar Chauhan's visit to Tirupati on January 11, 2025, where he offered prayers at the Tirumala temple for the exchange, its employees, members, listed companies and investors. Chauhan described the regulator's positive signals as feeling "like a divine sign from the Almighty."

Journey from 2016 to Resolution

The NSE's path to public listing has been marked by significant challenges since the exchange first filed its draft prospectus in December 2016. The IPO plans were subsequently stalled due to governance concerns and the co-location episode, which involved allegations that certain brokers received preferential access to trading systems.

Corrective Measures and Compliance

Momentum for the IPO resumed in 2024 after NSE reapplied for approval and settled the Trading Access Point and network connectivity case. The exchange paid a penalty of ₹643.00 crore as part of the settlement process.

Since then, NSE has implemented comprehensive corrective measures to address regulatory concerns:

• Changes in senior leadership positions
• Board restructuring initiatives
• Implementation of tighter compliance systems
• Enhanced governance frameworks

Market and Political Response

The potential IPO has drawn attention from political leaders, with Andhra Pradesh IT minister Nara Lokesh welcoming Chauhan's visit to Tirupati and describing the upcoming IPO as potentially "historic." The positive reception reflects the significance of NSE's public listing for India's capital markets.

Path Forward

With most legacy concerns now addressed through settlements and governance reforms, the NSE's extended wait to go public appears to be nearing its conclusion. The exchange's successful resolution of regulatory issues and implementation of corrective measures have positioned it for potential market debut after nearly a decade of preparation and remediation efforts.