The long-anticipated Initial Public Offering (IPO) of the National Stock Exchange (NSE) has moved a step closer to reality, with recent affirmations from the Securities and Exchange Board of India (SEBI). SEBI Chairman Tuhin Kanta Pandey has stated that there are currently no remaining regulatory obstacles preventing the NSE from proceeding with its IPO plans. This announcement provides a crucial green light after nearly a decade of delays.

Pandey made the remarks at the FE CFO Awards, confirming that the exchange is addressing pending legal formalities, which include settling payments and resolving a few outstanding cases. While he refrained from specifying a definitive timeline for the IPO, his statement marks significant progress, instilling confidence that NSE's public debut may be on the horizon.

One key clarification offered by Pandey addressed concerns about the structure of clearing corporations. He confirmed that SEBI is comfortable with the current ownership structure and that the demerger of clearing corporations is not a prerequisite for the IPO. He noted that different models for clearing corporation ownership exist globally, and SEBI is not pushing for structural reforms at this stage. Instead, the regulator may focus on unbundling trading and clearing fees to enhance transparency.

NSE's IPO plans have been in the works since 2016, when the exchange initially filed draft papers to raise ₹10,000 crore through an offer for sale of a 22% stake by existing shareholders. However, regulatory delays and legal challenges have kept the process in limbo. These challenges included a co-location case where allegations surfaced that some brokers gained unfair advantages through preferential access. In October 2024, NSE paid ₹640 crore to SEBI to settle a regulatory case, and there were reports of a broader settlement proposal to resolve legacy issues.

SEBI is expected to form a working group to improve fee transparency and ensure clearer governance independence, which should reduce compliance friction as NSE prepares for its IPO.

The market has reacted positively to these developments. There has been a surge in the unlisted shares of NSE. However, experts advise tempered optimism, noting that regulatory and legal hurdles, though diminishing, still exist. Investors should not expect immediate action, despite the positive momentum.

The successful listing of NSE is poised to have a significant impact on India's capital markets, enhancing transparency, deepening governance, and setting a benchmark for market infrastructure.