The Securities and Exchange Board of India (SEBI) has given in-principle approval to the National Stock Exchange's settlement plea in the colocation case, bringing India's largest stock exchange significantly closer to its long-delayed initial public offering. SEBI Chairman Tuhin Kanta Pandey confirmed this development, stating that the regulator agrees with NSE's settlement proposal despite the application still being processed by various committees.

Settlement Details and Timeline

The National Stock Exchange has offered to pay ₹1,388.00 crore in 2025 to settle charges related to the colocation case, where select brokers were allegedly granted preferred access to the exchange. This settlement represents a crucial milestone after years of legal battles that have prevented NSE from going public since 2016.

Pandey indicated that the no-objection certificate for the IPO could be issued within a month, marking the final regulatory hurdle before NSE can proceed with its public offering.

IPO Preparation and Market Impact

NSE Managing Director and CEO Ashish Kumar Chauhan welcomed the in-principle approval as "good news" while noting that official intimation is still pending. Once the NOC is received, NSE will begin preparing its draft red herring prospectus (DRHP), with Chauhan estimating the entire process will take seven to eight months from NOC approval to market launch.

The IPO timeline includes:

• Up to four months to file DRHP after receiving SEBI NOC
• Additional regulatory clearance period for the DRHP
• Seven to eight months total from NOC to market debut

Regulatory Framework Changes

SEBI has implemented supportive regulatory changes that benefit large-scale IPOs like NSE's offering. The regulator reduced the minimum public offer threshold from 5% to 2.5% for companies valued over ₹5.00 lakh crore, a move specifically designed to facilitate public offerings by major entities including NSE and Reliance Jio.

Market Oversight and Due Diligence Concerns

During his address to investment bankers, Chairman Pandey highlighted ongoing challenges in market oversight, particularly regarding disclosure gaps that reduce transparency and investor understanding. He emphasized that SEBI inspections continue to reveal issues with due diligence independence and reliance on issuer undertakings.

Key areas requiring improvement include:

• Capital structure disclosures explaining past capital raisings and preferential allotments
• Business model clarity with transparent revenue and cost drivers
• Enhanced management discussion and analysis beyond basic narration
• Independent verification of working capital and capital expenditure projections

Pandey stressed that investment bankers serve as the "first line of disclosure integrity," ensuring offer documents provide clear, complete, and verifiable information on business operations, risks, governance, and fund utilization. These disclosure gaps often lead to regulatory queries that extend companies' fundraising timelines, underscoring the importance of thorough preparation for major offerings like NSE's anticipated IPO.

Indian stock exchanges remained closed on January 15 for Brihanmumbai Municipal Corporation (BMC) elections, sparking an unusually sharp debate among the country's most influential market voices. The complete trading suspension across BSE and NSE drew intense scrutiny over exchange operational planning and India's global market credibility.

Kamath Questions Market Closure Logic

Zerodha Co-founder and CEO Nithin Kamath led the criticism, framing the closure as a structural failure rather than routine administrative necessity. He called the move "poor planning" and criticized the "serious lack of appreciation for second-order effects" in a globally connected financial system.

Quoting investor Charlie Munger, Kamath wrote: "Show me the incentive, and I will show you the outcome." He argued that the holiday persists because "no one who matters has any incentive to oppose the market holiday," emphasizing that such decisions highlight "how far we have to go before global investors take us seriously."

Arora Challenges Consistency Arguments

Helios Capital founder Samir Arora responded by questioning the consistency of arguments around trading day fairness. He challenged the selective logic around market operations, asking whether it's "unfair to foreign investors" when Indian exchanges operate on days that are holidays elsewhere.

Arora flagged broader calendar anomalies, particularly around the Union Budget presentation on February 1, questioning why markets should operate on Sunday merely because of budget timing. He emphasized the need for consistent logic in determining trading schedules.

Sharma Takes Tactical View

GQuant Investech founder Shankar Sharma offered a contrasting perspective, arguing that the holiday narrative is overstated. He listed "three clear positives" from the closure, framing it as a tactical buffer against foreign selling pressure.

Sharma argued that if markets were open, foreign institutional investors could have sold "another few thousand crores," suggesting the closure provided temporary market stability during volatile periods.

Broader Market Planning Questions

The debate highlighted fundamental questions about exchange operational planning as India seeks enhanced global market credibility. The National Stock Exchange continues evaluating whether to keep markets open on February 1 for Union Budget presentation, with no final decision announced.

The discussion reflects ongoing challenges in balancing local administrative requirements with international market expectations, particularly as global investors evaluate the consistency and predictability of Indian market operations in an increasingly interconnected financial system.