Image Source: CNBC TV18
The Securities and Exchange Board of India (SEBI) has stated that the long-awaited initial public offering (IPO) of the National Stock Exchange (NSE) is drawing nearer to becoming a reality, as both institutions move to resolve long-standing issues of regulation and governance. The NSE, India's biggest stock exchange, has been trying to list since 2016, but regulatory issues have constantly stalled its plans.
Following almost a decade of wait and several regulatory hurdles, SEBI Chairman Tuhin Kanta Pandey has affirmed that serious negotiations are ongoing with NSE to resolve and settle the fundamental issues holding back the IPO. Although a firm timeline is still elusive, both sides have shown a strong desire to proceed, indicating fresh thrust towards becoming one of India's biggest-ever public offers.
Background and Current Status
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NSE has been working towards a public listing since 2016, with its first IPO plans blown off course by regulatory issues and the high-profile co-location scandal.
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The exchange reapplied for a No Objection Certificate (NOC) from SEBI recently, reviving the listing process.
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SEBI Chairman Tuhin Kanta Pandey has said in public that the regulator is determined to resolve pending issues and is engaging closely with NSE to clear the way for the IPO.
Key Issues Under Debate
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Governance: SEBI has expressed concerns regarding governance failures, such as time taken to appoint a board chairman and overall governance model in NSE.
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Technology: The technological infrastructure's robustness and resilience of NSE, its IT resilience score, and recent pattern of tech downtime are up for questioning.
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Clearing Corporation: Concerns regarding NSE's 90% market share majority ownership in its Clearing Corporation have been identified as needing to be addressed.
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Litigation: Ongoing legal matters, including the aftermath of the co-location case, continue to be a focus area for SEBI.
SEBI’s Position and Intent
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SEBI has emphasized that public interest and market integrity take precedence over commercial considerations in the IPO approval process.
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The regulator has formed an internal committee to address the IPO’s outstanding issues and is seeking long-term solutions that uphold regulatory standards.
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SEBI has assured that the procedure is not unnecessarily delayed and that both parties are having regular, constructive talks.
NSE's Response and Promises
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NSE has expressed its intention to work with SEBI and resolve all regulatory issues on time.
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The exchange has promised to exit its clearing corporation business once regulatory certainty is obtained, in an attempt to obtain the necessary NOC.
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NSE asserts that it has had no major tech outages in the last few years and continues to develop its technology and governance systems.
Market Impact and Stakeholder Interest
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A successful listing would give an exit option to large shareholders such as Life Insurance Corporation of India, State Bank of India, Morgan Stanley, and the Canada Pension Plan Investment Board.
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The planned IPO may fetch up to ₹30,000 crore, beating all records for India's largest issue.
The listing will add more transparency and accountability to India's capital markets.
Relevant Sources: Business Standard, Outlook Business, NDTV Profit, Fortune India, CNBC TV18, Economic Times
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