Clearing the Path: NSE Files Rs 1,388 Crore Settlement to Resolve Co-location and Dark Fibre Cases

In a landmark regulatory development, the National Stock Exchange of India Ltd (NSE) has filed two separate settlement applications with the Securities and Exchange Board of India (SEBI) on June 20, 2025, aiming to resolve long-standing disputes related to co-location and dark fibre access. The proposed settlement, totaling Rs 1,388 crore, marks the largest ever offered to SEBI and could pave the way for NSE’s long-awaited initial public offering.

 

Background of the Cases

 

The co-location and dark fibre matters date back to 2015, when whistleblower reports and SEBI investigations revealed that certain brokers received preferential access to NSE’s trading servers, enabling faster execution of trades. The dark fibre case involved unauthorized installation of high-speed optical lines by unapproved vendors, further amplifying concerns over market fairness and infrastructure integrity.

 

Key highlights from the regulatory history:

- Co-location case involved tick-by-tick data access and server proximity advantages

- Dark fibre case centered on unauthorized network installations by Sampark Infotainment for select brokers

- SEBI issued multiple orders in 2019, penalizing NSE and former executives

- The Securities Appellate Tribunal later modified some penalties, prompting SEBI to appeal to the Supreme Court

 

Settlement Structure and Implications

 

NSE’s settlement proposal includes:

- Rs 1,165 crore to resolve the co-location matter

- Rs 223 crore to settle the dark fibre case

- Applications filed under SEBI’s consent mechanism, allowing resolution without admission of guilt

 

If SEBI accepts the applications, it will withdraw pending appeals before the Supreme Court and issue a No Objection Certificate, enabling NSE to proceed with its IPO filing. The exchange is expected to submit its Draft Red Herring Prospectus shortly thereafter.

 

Governance and Market Impact

 

The settlement is seen as a critical step toward restoring investor confidence and reinforcing governance standards at India’s largest stock exchange.

 

Operational and market implications:

- NSE aims to conclude its IPO within FY26, potentially listing on BSE or MSEI due to self-listing restrictions

- The exchange has already settled a separate TAP case for Rs 643 crore in 2023

- SEBI continues to monitor NSE’s technology infrastructure, clearing corporation independence, and board governance

 

The resolution is expected to unlock value for over one lakh shareholders and institutional investors, many of whom have awaited monetization since NSE’s original IPO filing in 2016.

 

Conclusion

 

NSE’s Rs 1,388 crore settlement proposal represents a decisive move to close a contentious chapter in India’s capital market history. If approved, it will not only clear regulatory hurdles for the exchange’s public listing but also signal a renewed commitment to transparency, fairness, and compliance in market operations.

 

Sources: Economic Times, Business Standard, CNBC TV18, Times of India, IPO Central, Financial Express, SEBI filings, Supreme Court records, NSE investor disclosures