India's market regulator is poised to clear a major regulatory hurdle for the National Stock Exchange's long-awaited initial public offering, potentially ending years of uncertainty surrounding the listing of the country's largest stock exchange. Securities and Exchange Board of India chairman Tuhin Kanta Pandey announced at a press conference in Chennai that the no-objection certificate will be issued soon, possibly before month-end.

NSE IPO Regulatory Clearance

"Sebi's no-objection certificate will be issued soon, possibly before the end of this month. It is then up to NSE to take the process forward," Pandey stated during the press conference held on Saturday. This announcement represents a significant development for NSE, which has faced prolonged delays in its public listing plans.

The IPO process encountered substantial obstacles due to the dark fibre case, which involved serious allegations regarding market fairness. The case centered on claims that certain high-frequency traders received preferential access to NSE's co-location servers between 2010 and 2014 through faster private communication lines, enabling quicker trade execution and potentially creating unfair advantages.

Unlike ordinary companies, market infrastructure institutions such as stock exchanges, depositories, and clearing corporations must obtain a no-objection certificate from Sebi before submitting their draft red herring prospectus. This additional regulatory step reflects their critical importance to the stability and functioning of India's financial markets.

T+0 Settlement Framework Challenges

Pandey also addressed the limited adoption of Sebi's T+0 settlement framework, under which trades are settled on the same day. India became the first country to adopt a T+1 settlement cycle for all listed stocks in January 2023, and subsequently introduced an optional T+0 settlement cycle in March 2024.

The T+0 framework initially covered 25 scrips and was expanded in December 2024 to include the top 500 stocks starting January 31, 2025. However, Pandey acknowledged significant implementation challenges.

"This is creating significant challenges, and few are willing to undertake it. The benefits appear limited, and given the level of disruption it causes, it does not seem worthwhile," Pandey explained during the press meet.

Mutual Fund Expense Ratio Framework

Regarding mutual funds, Pandey announced that Sebi will shortly notify a framework to allow performance-linked expense ratios. This proposal was initially introduced in an October consultation paper as part of broader transparency improvements around fees charged by fund houses.

"A notification will be issued in a day or two to enable it. Then Sebi will work with the industry to benchmark the performance. Performance management is the tricky part here," the Sebi chairman stated.

Corporate Bond Market Initiatives

Speaking at the 5th Association of National Exchanges Members of India International Capital Market Convention 2026, Pandey outlined plans to introduce bond derivatives to deepen the corporate bond market. The regulator has taken concrete steps to make the corporate bond market more accessible for both issuers and investors.

"We are examining bond derivatives as another initiative. Growth of municipal bonds is also being facilitated through regulatory reforms and outreach programs," he said.

Technology and Surveillance Enhancements

Sebi is increasingly leveraging artificial intelligence to strengthen market surveillance and investor protection. The regulator has implemented the Sebi Sudarshan system to detect fraudsters on social media who pose as registered advisors to mislead investors.

"We are developing an AI tool to analyze cyber audit reports and identify gaps before they become breaches. We have to keep in mind that AI can augment judgment - it cannot replace human accountability," Pandey emphasized.

Additionally, Sebi is working to simplify KYC processes by reducing repeat documentation and streamlining re-KYC procedures, with public consultation on these proposals expected to follow shortly.

The National Stock Exchange of India has announced a settlement holiday on January 15 across multiple segments due to the Brihanmumbai Municipal Corporation elections in Mumbai. The holiday will affect the debt segment, currency derivatives, and equity settlement operations, though equity trading will continue as normal.

Settlement Schedule Changes

The exchange has modified its settlement timeline to accommodate the election-related holiday. Key changes include:

Government Holiday Declaration

The Maharashtra government declared January 15 as a public holiday across the state for local body elections. This decision impacts 29 municipal corporations, including Mumbai City and Mumbai Suburban districts under the Brihanmumbai Municipal Corporation.

Mumbai serves as India's financial capital, housing the headquarters of major stock exchanges, banks, trading companies, and the Reserve Bank of India. The city's central role in the financial sector makes such operational adjustments significant for market participants.

Market Operations Impact

During a settlement holiday, equity trading continues normally, but the clearing and settling process is paused. This means the transfer of shares and funds between buyers and sellers is delayed until the next business day. Investors will experience delays in share delivery to demat accounts and fund credits to bank accounts.

Notably, January 15 coincides with the Sensex weekly futures and options expiry day, adding complexity to the trading schedule. The commodity exchange MCX will continue normal operations, as January 15 is not designated as a trading holiday on their calendar.

Historical Precedent

This decision follows a similar approach from February 21, 2017, when both NSE and BSE announced trading holidays for currency derivatives and settlement holidays for equity markets during the previous BMC elections. Both exchanges are required to issue formal circulars to inform market participants about such operational changes.

The next scheduled stock market holiday is Republic Day on January 26, which falls on a Monday. January 15 was not originally listed as a market holiday in the annual calendar, making this an exceptional closure due to the electoral process.