We are not opposed to NSE’s IPO: Sebi’s Tuhin Kanta Pandey

It has been a long wait for what was once expected to be one of India’s most high-profile listings. The National Stock Exchange of India (NSE), the country’s largest bourse by trading volumes, has spent nearly a decade trying to get regulatory clearance to go public. While rival BSE has been trading on the markets since 2017, NSE continues to wait on the sidelines. Now, in his first detailed remarks in an exclusive interaction with Fortune India, since taking charge on March 1, 2025, the Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey has offered the clearest picture yet of what’s causing the holdup—and why the wait is far from over.

“I want to dispel that opinion [that Sebi has been reluctant to allow the IPO]. BSE is already listed, so there’s no reason why NSE cannot be listed as well,” Pandey told Fortune India. The issue, he clarified, isn’t opposition in principle, but a set of significant structural concerns that must be addressed before the regulator can move forward.

“The issues primarily relate to governance—what the governance structure is going to be and how it will evolve. There’s a need for greater clarity on that front,” he said, highlighting what has long been one of Sebi’s key expectations: that NSE reform and clearly define its leadership, oversight, and executive accountability frameworks before stepping into the public markets. Over the past few years, Sebi has also pushed for revisions in the compensation structure for NSE’s key managerial personnel—a move aimed at improving transparency and alignment with public governance norms.

His comments come even as the NSE has now reapplied for a fresh No Objection Certificate after having filed its first DRHP in 2016, aiming to raise ₹10,000 crore through an offer for sale by existing shareholders. However, regulatory concerns around governance and the co-location case prompted Sebi to return the application in 2019, asking the exchange to resolve its issues first. Since then, NSE has sought Sebi’s clearance multiple times—in 2019, twice in 2020, and again in 2024, and most recently in August 2024.

Another unresolved concern is NSE’s technology infrastructure, which has seen its share of scrutiny due to past glitches and the legacy of the co-location scandal. “Then there’s the question of technology—how it will be handled and safeguarded,” Pandey said, signalling that the regulator expects stronger commitments on system resilience and operational control before signing off.

Plus, there is the matter of NSE Clearing, a 100% subsidiary of the bourse that currently handles the exchange’s clearing operations. Sebi has been pushing for a separation of this function to avoid structural conflicts of interest. “Currently, it is appended to the exchange. So, what kind of separation, if any, will be required? That needs to be carefully thought through. What could be the road map going forward? These are the kinds of things that need to be examined,” Pandey said.

The regulator in a letter to the exchange has flagged multiple deficiencies in IPO application and has reportedly given NSE a 24-month window to address these before it can move forward with its listing plans.

One of the most significant hurdles remains pending litigation. Even though the NSE settled a major regulatory overhang in October 2024, paying a penalty of ₹643 crore to close one chapter of the co-location scandal, not all legal threads have been tied. Cases linked to the same controversy are still pending in the Supreme Court, and until those are resolved, Sebi is unwilling to let the matter rest. “We can’t keep it hanging,” Pandey said, making clear that legal clarity is a prerequisite for investor protection and market confidence.

What remains clear is that Sebi’s approach isn’t guided by hesitation, but by caution and responsibility. As Pandey put it, “Our overarching objective is to maintain the highest standards of market integrity and market stability. Since this involves a major exchange, these considerations become even more important.”

That said, the door remains open. The regulator is not opposed to the listing—only insistent that it meets the standards befitting a market institution of NSE’s stature. “There is no predisposition at all on this matter. A pragmatic view will be worked out in the best interest of the market,” Pandey concluded.

But for now, the IPO remains in waiting, though the road map is much clearer than ever.