The Securities and Exchange Board of India has taken a crucial step forward in the long-pending unfair market access case involving the National Stock Exchange. SEBI chairman Tuhin Kanta Pandey confirmed that the regulator has given its "in-principle" agreement to the settlement application filed by NSE. This development could finally remove the regulatory obstacle that has blocked the country's premier stock exchange from launching its initial public offering for nearly a decade.
Regulatory Hurdle Cleared After Years of Delay
Pandey made the announcement while speaking with reporters on the sidelines of an AIBI event. He explained that multiple committees within SEBI are currently examining NSE's settlement application, but the regulator is broadly aligned with the proposal. "The settlement application from NSE is in process with different committees of SEBI, but in principle, we agree on the settlement," Pandey stated clearly.
This settlement represents a critical milestone for NSE's efforts to obtain a no-objection certificate from SEBI for its much-anticipated public offering. The stock exchange has been trying to go public since 2016, but its plans hit a major roadblock due to the co-location controversy. In this case, certain brokers faced allegations of receiving preferential access to NSE's trading systems.
Financial Settlement and IPO Timeline
After years of legal battles, NSE offered in 2025 to pay Rs 1,388 crore to settle the charges and move forward with its listing process. The proposed IPO is expected to rank among the largest offerings in India's capital markets history, generating significant investor interest.
NSE managing director and chief executive Ashish Kumar Chauhan responded positively to the development, describing SEBI's in-principle approval as an encouraging signal. However, he clarified that the exchange has not yet received any formal communication from the regulator.
Chauhan outlined the expected timeline once NSE receives the formal NOC. "Once we receive that, we will of course have to follow whatever is there in the intimation. Once we get the NOC, we will start preparing for filing the draft red herring prospectus," he explained.
The NSE chief estimated that it would take up to four months after receiving SEBI's NOC to file the DRHP, which would then require clearance from the regulator. The actual IPO could reach the markets approximately seven to eight months after the NOC issuance. "I still think after NOC, 7-8 months for the IPO. If we can expedite that, we will try to do that," Chauhan added.
Regulatory Changes and Stake Sale Flexibility
In related developments, Pandey revealed that the government has approved a proposal allowing large companies to sell as little as 2.5% stake in their IPOs. SEBI had reduced the minimum public offer threshold from 5% to 2.5% last year for companies valued at over Rs 5 lakh crore. This regulatory change particularly benefits entities like NSE and Reliance Jio when they approach the public markets.
However, the SEBI chairman declined to comment on the high demand for NSE shares in the unlisted market, noting that this issue falls under the jurisdiction of the Ministry of Corporate Affairs.
SEBI Flags Concerns About IPO Disclosures
Separately, while addressing investment bankers at the same event, Pandey raised serious concerns about disclosure standards in public issue documents. He pointed out that SEBI continues to identify "recurring disclosure gaps" that compromise transparency and investor understanding.
Pandey emphasized that SEBI inspections have revealed that due diligence processes are not always independent. In some cases, they rely excessively on issuer undertakings rather than thorough verification. He stressed the need for independent verification of projections related to working capital and capital expenditure.
The SEBI chief reminded investment bankers that they serve as the "first line of disclosure integrity." Their responsibility includes ensuring that offer documents provide clear, complete, and verifiable information about business details, risks, governance structures, and use of funds.
According to Pandey, inadequate disclosures frequently lead to regulatory queries and extended fundraising timelines for companies. He specified that capital structure disclosures must clearly outline past fundraises, preferential allotments, and changes in control, especially when these occur close to an IPO.
"We also expect greater Business Model clarity, with transparent revenue and cost drivers," Pandey stated. He added that management discussion and analysis sections should go beyond simple narration and properly explain both internal and external factors influencing company performance.
The developments mark a significant turning point for India's capital markets, potentially paving the way for one of the country's most anticipated public offerings while highlighting ongoing regulatory concerns about disclosure standards in IPO documents.
