Battle for Transparency: Investors Urge SEBI Approval for NSE IPO in Legal Showdown

The Growing Demand for NSE’s Market Debut

The National Stock Exchange (NSE), India’s largest and most prominent stock exchange, has been at the center of controversy regarding its Initial Public Offering (IPO). While investor anticipation for the NSE’s market debut remains high, the Securities and Exchange Board of India (SEBI) has withheld approval, citing unresolved issues.

This standoff reached a tipping point when the People Activism Forum, representing aggrieved investors, approached the Delhi High Court. They demanded SEBI expedite its decision to approve the NSE IPO, claiming delays hinder shareholder value and public market participation.

A Long Road to Listing: Timeline of NSE’s IPO Journey

1. Initial Filing (2016): NSE initially filed for its IPO in 2016.

2. Withdrawal (2019): The IPO was withdrawn due to regulatory scrutiny following allegations in the co-location scam.

3. Reapplication for NOC (2024): After years of compliance and regulatory discussions, NSE reapplied for SEBI’s no-objection certificate on August 27, 2024.

4. Continued Delay: Despite submitting detailed evidence of compliance, SEBI has yet to grant approval, citing unresolved concerns.

Investor Concerns: Unlocking Shareholder Value

Investors argue that SEBI’s delay is unjustified and detrimental to both private and public interests. Key points raised include:

• Missed Opportunities: NSE shares, which trade actively in the unlisted market, have doubled in value from ₹900 to ₹1,800 on IPO speculation. Investors believe an official listing would unlock further value.

• Public Participation: As the country’s largest stock exchange, NSE’s IPO offers an unparalleled opportunity for retail and institutional investors to participate in its growth story.

• Regulatory Benefits: Listing NSE would subject it to stricter regulatory oversight, promoting greater transparency and governance.

Key Stakeholders in NSE

NSE’s major shareholders include a mix of institutional and private entities, reflecting its widespread appeal:

• Life Insurance Corporation (LIC): 10.72%

• Stock Holding Corporation & SBI Capital Markets: 4.4% each

• State Bank of India: 3.23%

• Radhakishan Damani (D-Mart founder): 1.58%

• Aranda Investments (foreign investor): 5%

In November 2024, NSE distributed four bonus shares for every share held, further bolstering its appeal among stakeholders.

SEBI’s Stand: Why the Delay?

SEBI has cited multiple reasons for withholding the NOC:

1. Co-Location Scam: SEBI references unresolved issues from the infamous scam, despite having closed the case in September 2024 due to insufficient evidence.

2. Third-Party Precedents: The regulator questions the Forum’s standing in the case, cautioning that a favorable ruling could open doors to similar third-party interventions.

SEBI maintains that the integrity of the market must be prioritized and that any approval for NSE’s IPO must follow a thorough review of all regulatory and governance concerns.

The Forum’s Legal Push

The People Activism Forum first petitioned the Delhi High Court in May 2024, demanding clarity on the NOC delays. SEBI responded by asking NSE to reapply, which it did in August 2024. However, SEBI’s continued resistance led the Forum to escalate its efforts, claiming the delays lacked legal and procedural justification.

The Forum asserts that:

• NSE has complied with all regulatory requirements.

• There is no valid reason for SEBI to withhold the NOC.

• The delays are undermining shareholder value and public market development.

High Stakes: What’s at Risk?

The outcome of this legal battle holds significant implications:

1. For NSE: A favorable ruling could pave the way for its IPO, marking a new chapter in its growth story.

2. For SEBI: A precedent could be set for third-party interventions in regulatory decisions.

3. For Investors: Unlocking NSE’s value in public markets could lead to substantial financial gains.

Looking Ahead: What Happens Next?

The Delhi High Court has scheduled the case for March 6, 2025. Investors and market participants hope for a resolution that expedites NSE’s IPO process. A successful listing would not only enhance shareholder returns but also bring NSE under the stricter regulatory framework applicable to listed entities, fostering greater transparency.

A Defining Moment for Indian Markets

The demand for NSE’s IPO approval highlights the growing clamor for transparency and value creation in Indian markets. For investors, NSE’s listing represents not just a financial milestone but a critical step toward enhancing the equity market’s depth and inclusivity.

The Delhi High Court’s decision will serve as a litmus test for regulatory accountability and investor rights. As the market awaits the outcome, one thing is clear: NSE’s IPO journey is more than a financial event; it’s a landmark moment shaping the future of India’s financial landscape.

Disclaimer: The views expressed are based on available reports and legal proceedings. Investors should consult professionals before making financial decisions.