Hurdles In NSE IPO Approval, Explains SEBI In Response To Delhi High Court Case | Profit Exclusive

The NSE had asked the regulator to reconsider its decision to block its IPO. This request, made in a Delhi High Court affidavit, responds to a petition from the People Activism Forum aiming to speed up NSE's IPO.

NSE had previously received approval from the markets regulator to list its shares, but SEBI imposed a six-month ban in 2019 due to issues with NSE’s co-location facilities. This ban was later modified but still upheld.

SEBI mentioned in its reply that it suspended its review of NSE’s DRHP due to an ongoing investigation into NSE’s co-location practices. The investigation found that NSE had failed to ensure a level playing field for trading members, violating regulations intended to prevent unfair advantages in the trading system.

The reply, seen by NDTV Profit, further mentions that on Feb. 5, 2019, SEBI returned the DRHP to NSE due to significant changes in the offer size, caused by a reduction in the number of shareholders and shares being offered. NSE was advised to refile the DRHP once the investigation was resolved. It requested to maintain the status quo, but SEBI disagreed, maintaining its position due to the unresolved regulatory issues.

NSE continued to seek approval for its IPO plan, submitting applications in November 2019 and again in July 2020. SEBI requested an undertaking from NSE’s Promoter and Director in August 2021, confirming compliance with some regulations. NSE provided the required undertaking but has not yet requested a new NOC for listing.

The reply further mentions the regulator’s observations that on July 1, 2022, SEBI identified issues in NSE’s operations, including technology, governance, and regulatory compliance concerns. SEBI advised NSE to address these issues before proceeding with the IPO request.

NSE responded to SEBI’s queries on Nov. 24, 2022, and May 14, 2024. However, these responses did not include a fresh request for an NOC for listing. Therefore, SEBI argued that claims of delays in granting permission for NSE’s IPO were unfounded.

SEBI also addressed a news article dated Dec. 18, 2023, which incorrectly stated that it had imposed conditions on NSE, such as maintaining a glitch-free operation for a year. SEBI clarified in the reply that these conditions were never part of their directives and that NSE had not been required to meet such conditions.

SEBI further mentioned that correspondence related to the IPO process is confidential to protect sensitive information and commercial interests. Revealing such details publicly could undermine the regulatory process and the exchange's competitive position, the regulator further explained.

In its reply, SEBI submitted that the People Activism Forum is not directly involved in the regulatory proceedings concerning NSE, and is not in a position to question the market regulator's decisions. 

The regulatory body further mentioned that allowing such challenges could lead to numerous unrelated parties contesting regulatory orders, potentially undermining the authority and efficacy of market regulations.