NSE IPO Could Face Potential Delay As SEBI Flags Shortcomings—NDTV Profit Exclusive

The National Stock Exchange could face a potential delay of up to two years in launching its much-anticipated initial public offering, following a detailed letter from the Securities and Exchange Board of India flagged shortcomings, according to a senior official familiar with the matter.

The markets regulator has advised the NSE to pause the IPO process until it addresses several concerns, recommending a waiting period of two years to resolve the issues, the senior official told NDTV Profit.

The letter was sent at the end of February, coinciding with the conclusion of Madhabi Puri Buch's tenure as SEBI’s chairperson.

SEBI’s market regulation department flagged various issues, including concerns over the exchange’s internal processes, governance, and reducing stakes in its clearing corporation. The remuneration of key managerial personnel was also questioned, sources said.

The development casts uncertainty over one of the most awaited stock market debuts in the country. Industry sources though argue that certain issues raised fall outside SEBI’s purview and are unrelated to the IPO.

NSE spokesperson declined to comment in response to the email query.

SEBI’s letter has put a hold on the exchange’s IPO plans until the raised concerns are sufficiently addressed, sources added. However, regulator may reconsider its stance if the NSE takes the necessary steps to resolve the issues highlighted, they said.

In its just concluded board meeting, new SEBI chief Tuhin Kanta Pandey on NSE IPO said that the regulator will review the issues. “We don’t answer on specifics, but we’ll review the issues and determine how to move forward,” Pandey said.

NSE filed its IPO prospectus back in December 2016, and last August, it sought a No Objection Certificate from SEBI, which is still pending. For now, the exchange must work closely with SEBI to resolve these issues and pave the way for a future listing.

The delay marks a setback for NSE, which had hoped to use the IPO to raise capital, boost transparency, and enhance governance. Initially aiming to become one of the largest public listings in recent years, NSE must now focus on resolving these regulatory hurdles before proceeding.