After nearly a decade of delays, regulatory hurdles, and legal wrangling, India’s largest stock exchange—the National Stock Exchange (NSE)—is finally poised to take a significant step towards its long-awaited Initial Public Offering (IPO). In a key NSE IPO update, the exchange has offered a record INR 1,388 crore (~INR 160 million) to the Securities and Exchange Board of India (SEBI) to settle long-pending litigation related to the infamous co-location and dark fibre controversies. If accepted, the settlement will clear the way for NSE to file its Draft Red Herring Prospectus (DRHP) and potentially list by Q4 of FY26.
NSE IPO Update: Case Settlement
According to multiple reports and sources close to the matter, the settlement application, filed on 20 June 2025, proposes to resolve two critical regulatory cases:
- INR 1,165 crore for the Co-location case, and
- INR 223 crore for the Dark Fibre matter.
This INR 1,388 crore settlement would be the largest ever paid to SEBI under the regulator’s consent mechanism. Importantly, NSE is not admitting or denying guilt—an option permitted under SEBI’s settlement regulations—but the payment and withdrawal of legal cases will allow the IPO process to move forward.
The offer follows prolonged informal negotiations and is currently undergoing internal review within SEBI. The High Powered Advisory Committee (HPAC) on Settlements and a panel of SEBI’s Whole-Time Members are expected to give their decision in the coming weeks. If approved, SEBI and NSE will jointly request the Supreme Court to allow withdrawal of pending cases.
NSE IPO Update: What’s Being Resolved?
The co-location controversy, first unearthed by a whistleblower in 2015, alleged that certain brokers gained preferential access to NSE’s trading systems by placing their servers closer to the exchange’s infrastructure. This provided them a speed advantage in executing trades, raising serious concerns about market fairness and integrity.
The dark fibre matter further complicated the exchange’s legal woes. NSE had allowed unauthorised service provider Sampark Infotainment to install high-speed fibre connections for select brokers. SEBI penalised multiple parties in 2019, including NSE and its former top executives, for failing to verify vendor credentials and for compromising regulatory compliance.
SEBI’s Checklist on NSE IPO: Technology and Governance
Beyond legal settlements, SEBI has flagged issues around NSE’s internal governance, technology, and management processes. Concerns include:
- Delays in appointing a chairperson,
- Lack of transparency in executive remuneration,
- Weaknesses in technology systems and incident response mechanisms.
A final inspection by SEBI is reportedly underway. The exchange is expected to address these operational issues as a precondition for receiving the No Objection Certificate (NOC) required for proceeding with the IPO.
Read Also: Is NSE Undervalued or BSE Overvalued? NSE IPO May Be the Reset Trigger!
NSE IPO Timeline: Q4 FY26 Target
If the settlement is approved by SEBI and subsequently accepted by the Supreme Court, NSE could receive its NOC as early as July 2025. The exchange is expected to begin the process of preparing its DRHP, which will require 4–5 months due to mandatory inclusion of audited quarterly financials. This would be followed by SEBI review and merchant banker queries, placing a potential IPO launch in the last quarter of FY26 (January–March 2026).
What’s at Stake?
The IPO has big financial implications for public sector stakeholders. PSU investors, including LIC (10.72%) and SBI (7.76%), will see huge mark-to-market gains on their investments. Global investors like Morgan Stanley (1.58%) and Canada Pension Plan Investment Board (1.60%) will also benefit.
Listing of NSE, a cash-rich and global leader in derivatives exchange, will be one of the largest in India’s history. With strong fundamentals, consistent profitability (PAT of INR 2,650 crore for Q4 FY2025) and dominant market position, investor appetite for the IPO will be huge.
Conclusion: Light at the End of the Tunnel
NSE had filed for IPO in 2016, but regulatory issues over governance and operational issues led to repeated rejections. With the settlement process almost over and regulatory clearance in sight, India’s most-awaited IPO could be finally here.
If everything goes as planned, NSE’s listing will not only give liquidity to long-term investors but also mark a new era of transparency and accountability for one of India’s most powerful financial institutions.
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