SEBI to Delhi HC: No fresh request for NOC for NSE IPO listing, delays lies with exchange

Capital markets regulator Securities and Exchange Board of India (Sebi) has told the Delhi High Court that the National Stock Exchange (NSE) has not submitted any fresh plea for a no-objection certificate (NOC) for its listing. 

This response was to a writ petition filed the People Activism Forum seeking to expedite the National Stock Exchange's (NSE) initial public offering (IPO). The markets regulator clarified that the delay in the IPO process lies with the National Stock Exchange (NSE) itself and not with the regulatory body.

The National Stock Exchange (NSE) had previously received approval from the Sebi to list its shares. In 2019, SEBI imposed a six-month ban on NSE due to complications regarding its co-location facilities. The ban was later adjusted but still upheld by the regulatory body.

Sebi received inquiries from the National Stock Exchange (NSE), and the exchange responded in May 2024. During this correspondence, the NSE did not explicitly request a No Objection Certificate (NOC) for listing its shares.

In 2019, the regulatory body returned NSE's draft red herring prospectus (DRHP), which had been initially filed in December 2016. The NSE was advised to submit a new DRHP once the investigation concerning the colocation issue was resolved.

In June 2022, the NSE sought approval from Sebi for its listing.

NSE submitted its responses in November 2022 and in May this year.

Sebi elaborated on the situation by stating that in 2019, they returned the Draft Red Herring Prospectus (DRHP) to the National Stock Exchange (NSE) due to extensive modifications in the size of the offering. These changes were prompted by a reduction in the shareholder count and the number of shares intended to be offered. Sebi instructed NSE to resubmit the DRHP once the inquiry had been completed.

The regulator also clarified that it has not set the condition for NSE to remain glitch-free for one year as reported in the media. 

Sebi requested the court to dismiss the plea, arguing it is inappropriate to direct a statutory regulator on how to perform its duties and make decisions.

Additionally, Sebi also refused to disclose the information on its investigations stating that such information can adversely affect the market, competitive position, and benefit third parties.   

It added that the petition by People Activism Forum was an ‘act of outsider to derail regulatory proceedings’. 

In the most recent earnings call for the June quarter, Ashishkumar Chauhan, MD and CEO, NSE, said that there remains uncertainty surrounding the Initial Public Offering (IPO) of the exchange.

During a submission made in June, the NSE appealed to the market regulator to reconsider its decision regarding the permission for the exchange to become publicly listed.

The NSE stated that the majority of ongoing legal matters are nearing resolution, suggesting that this should not be taken as a reflection of the current governance and regulatory standards to which it adheres.

Furthermore, the NSE emphasized its full compliance with all disclosure requirements as prescribed by the Securities and Exchange Board of India (Sebi).