NSE IPO Deep Dive: Financial Performance, Governance Risks, and SEBI Clearances

The Exchange That Runs Indian Finance

The National Stock Exchange of India Limited was incorporated in November 1992 and commenced operations in November 1994, created deliberately as a response to the institutional failures exposed by the Harshad Mehta scam at the Bombay Stock Exchange. Its founding shareholders included institutions like the Industrial Development Bank of India, the Life Insurance Corporation, the State Bank of India, and several other public sector entities. Within a decade of its founding, NSE had overtaken the BSE in trading volumes, and by the 2010s it had established a position of near-monopoly in Indian derivatives trading.

NSE is the world’s largest derivatives exchange by volume of contracts traded, a position it has held for multiple consecutive years. In the Indian cash equity market, NSE commands over 93 percent market share. Every Nifty50 move watched by millions of investors, every options contract written by institutional desks, every futures position taken by algorithmic traders flows through NSE’s systems. The exchange processed an average daily turnover in equity derivatives that runs into tens of thousands of crore rupees. Its indices, primarily the Nifty50 and the Bank Nifty, are the primary benchmarks for the Rs 47 lakh crore-plus mutual fund industry’s equity allocation.

Given this scale, the question of why NSE is not listed is not academic. A publicly listed exchange is subject to continuous market disclosure requirements, quarterly reporting obligations, analyst scrutiny, and the reputational discipline of share price visibility. An unlisted exchange faces none of these external accountability mechanisms. Its governance rests entirely on its internal board, its regulators, and public interest directors appointed by SEBI. The decade between 2016 and 2026, during which NSE remained unlisted despite being India’s most profitable financial institution, is precisely the decade in which its most significant governance failures were discovered, investigated, and partially resolved.

How Co-location Is Supposed to Work

Co-location (colo) is a legitimate and widely used practice in global financial markets. An exchange provides physical space in its data centre for trading members to install their own servers as close as possible to the exchange’s matching engine. The shorter the physical cable distance, the lower the latency, meaning orders reach the exchange’s system faster. For high-frequency trading firms that execute thousands of orders per second and compete on microsecond advantages, colo access is operationally essential. NSE launched its co-location facility in January 2010. At that point, the service was offered to all trading members on an equal-access basis in theory.

The Tick-by-Tick Vulnerability

NSE’s market data was disseminated through a system called Tick-by-Tick (TBT) architecture, which transmitted price and order data sequentially. In a sequential data feed, the first server to establish a connection received the data first. Under this architecture, a trading member whose server logged on first to a TBT server would consistently receive market data fractionally earlier than all other members connected to the same server. Between June 2010 and March 2014, when NSE used the TBT dissemination system at its colo facility, this sequential access created a structural first-mover advantage that was allegedly exploited by select trading members.

OPG Securities and the Alleged Unfair Advantage

The primary named beneficiary in early investigations was OPG Securities, a Delhi-based brokerage whose managing director was Sanjay Gupta. SEBI investigations alleged that OPG Securities consistently logged in first to selected Tick-by-Tick servers at NSE’s co-location facility on most trading days for four years between 2010 and 2014. It also allegedly had access to NSE servers that had better hardware and lower load, providing a further latency advantage. SEBI calculated that OPG Securities’ unfair gain from this preferential access was Rs 15.57 crore. Other trading members alleged to have benefited from colo irregularities included AlphaGrep, another high-frequency trading firm, and the use of dark fibre technology provided through an entity called Sampark (Infotainment) to gain connectivity advantages. In June 2018, the Central Bureau of Investigation registered an FIR against Sanjay Gupta, his brother-in-law Aman Kokrady, and Ajay Shah, a data specialist at NSE, along with unknown officials of NSE and SEBI.

A Second Crisis Entirely Separate From Co-location

Just as SEBI was working through the co-location investigation, a second and entirely separate governance failure emerged. Chitra Ramkrishna served as NSE’s Managing Director and CEO from 2013 until her resignation in December 2016. On February 11, 2022, SEBI released a 190-page order against Ramkrishna and others, revealing that from at least 2013 onwards, Ramkrishna had been sharing NSE’s confidential information with an unidentified external person and taking decisions based on that person’s guidance.

The information shared included NSE’s organisational structure, financial results and business plans, dividend scenarios, and details of performance appraisals of NSE employees. When SEBI questioned Ramkrishna about the identity of this person in its 2018 submissions, she described the individual as a “Yogi Paramahansa” or “Siddha Purusha” who “largely dwelt in the Himalayan ranges” and was “a spiritual force that could manifest itself anywhere and did not have any physical or locational coordinates.” All of this was communicated through an email address: rigyajursama@outlook.com.

Anand Subramanian and the Governance Failure

Anand Subramanian had no prior capital markets experience when he was appointed as chief strategic adviser to Ramkrishna in April 2013, at an annual compensation of Rs 1.68 crore. He was later elevated to Group Operating Officer (GOO) with compensation rising to Rs 4.21 crore annually, described by SEBI as “frequent, arbitrary and disproportionate” increases in the absence of documented performance evaluation. SEBI found that Subramanian was delegated powers of management substantially equivalent to those of the MD and CEO, effectively creating a parallel authority structure within the exchange that was unknown to the exchange’s board, its public interest directors, and SEBI.

The Penalties for the Governance Failure

In the February 2022 order, SEBI levied a fine of Rs 3 crore on Chitra Ramkrishna personally, Rs 2 crore each on NSE, Anand Subramanian, former NSE MD Ravi Narain, and Rs 6 lakh on VR Narasimhan, the then-chief regulatory officer and compliance officer. Ramkrishna, Subramanian, and Narain were barred from associating with any SEBI-registered market infrastructure institution or intermediary for three years in Ramkrishna’s and Subramanian’s cases and two years in Narain’s case. NSE itself was barred from launching any new product for six months. CBI subsequently arrested both Ramkrishna and Subramanian, issued lookout circulars, and conducted raids with the Income Tax Department.

The Cumulative Regulatory Cost to NSE

Why the TAP Case Was a Separate Matter from Co-location

The Rs 643 crore settlement paid in September 2024, formalized by SEBI’s October 4, 2024 order, relates to what SEBI called the Trading Access Point (TAP) architecture and network connectivity case. This was distinct from the core co-location TBT architecture allegation. The TAP case concerned the manner in which NSE’s network connectivity was structured to allow certain trading members to access the exchange’s systems through preferred routes that gave speed advantages. The settlement involved not just NSE as an institution but also former MD and CEO Vikram Limaye and eight other individuals who were named in the SEBI proceedings. NSE’s payment of Rs 643 crore in September 2024 was identified by SEBI Chairman Tuhin Kanta Pandey as a critical prerequisite that had been satisfied before the NOC question could be seriously considered.

The Rs 1,387.39 Crore Settlement: Largest Ever With SEBI

On June 20, 2025, NSE filed a settlement application with SEBI offering Rs 1,387.39 crore to resolve the remaining co-location and dark fibre cases. This is the largest settlement application ever filed with the markets regulator. NSE provisioned Rs 1,297 crore in its second quarter FY26 accounts to cover this settlement, noting that this was in addition to the Rs 100 crore SAT-ordered penalty that had already been deposited in an earlier period. SEBI agreed to the settlement in principle on January 15, 2026. The NOC was formally issued on January 30, 2026. NSE’s board approved the IPO via Offer for Sale on February 6, 2026.

A Uniquely Profitable Institution

The controversy around NSE’s governance should not obscure what it is financially: one of the most profitable companies in India, with an operating model that generates extraordinary margins from its dominant market position. NSE’s revenues come from transaction charges (the primary driver), listing fees, data and analytics services, co-location services, index licensing fees, and other financial services through subsidiaries including NSE Clearing Limited, NSE IFSC, and NSE Data and Analytics.

NSE’s Shareholder Structure

NSE’s shares are not traded on any exchange. They change hands in the unlisted or grey market, where the last disclosed transaction price was approximately Rs 2,389 per share, implying an estimated market capitalisation of approximately Rs 5.91 lakh crore. The share register as of March 31, 2025 shows a broad base of institutional shareholders, with no single promoter group. Ten insurance companies collectively hold 19.22 percent. Foreign investors account for meaningful stakes through entities registered in Mauritius and other jurisdictions.

A Pure Offer for Sale: No Fresh Capital

The NSE IPO will be structured entirely as an Offer for Sale, meaning no fresh shares will be issued and no new capital will flow into the exchange. Existing shareholders will sell a portion of their holdings to public investors. SEBI’s rules for IPOs exceeding Rs 10,000 crore require a minimum public dilution of 2.5 percent of the post-issue capital. NSE is expected to target a stake sale in the range of 4 to 5 percent, which at an implied market capitalisation of approximately Rs 5.91 lakh crore would generate estimated proceeds of approximately Rs 22,000 to Rs 23,000 crore for selling shareholders. Confirmed sellers at the time of writing include Temasek (Singapore’s sovereign wealth fund), the Canada Pension Plan Investment Board, Life Insurance Corporation of India, and ChrysCapital.

Three Governance Questions That Remain Unresolved

The SEBI NOC and the approaching DRHP filing do not mean that all governance questions have been answered. Three structural issues remain that will need to be addressed in the offer document and, over a longer period, in NSE’s post-listing governance framework.

The first is the NSE Clearing Limited (NCL) ownership question. NSE is the majority owner of its clearing corporation. SEBI has been of the view that clearing corporations should operate independently of their parent exchanges, particularly as interoperability between exchanges becomes a policy priority. A clearing corporation that is majority-owned by one exchange may not serve the interests of all exchange participants equally. The March 2025 SEBI response to NSE’s earlier NOC application flagged this as a deficiency and gave the exchange up to 24 months to address it. Whether this has been fully resolved or merely deferred is a question the DRHP will need to answer.

The second is the disclosure standard for the settlement history. Potential investors in the NSE IPO will need to evaluate whether the Rs 1,388 crore in settlements and penalties reflects a chapter that is fully closed or represents an ongoing regulatory relationship in which further scrutiny is possible. The offer document will need to provide a comprehensive account of every pending case, every investigation, every settlement, and every individual who was sanctioned in connection with the exchange’s governance failures. Given that the CBI’s co-location FIR remains active and some individuals who were named have ongoing legal proceedings, the disclosure task is complex.

The third is the question of public interest director effectiveness. SEBI’s orders in both the co-location and governance cases noted that NSE’s board, including its public interest directors appointed specifically to provide independent oversight of a systemically important market infrastructure institution, failed to detect or prevent the irregularities that occurred. The fact that a parallel authority structure under Subramanian operated for years without board awareness raises a fundamental question about whether the institutional design of MII governance is adequate.

Disclaimer: This article is for informational and educational purposes only and is current as of June 9, 2026. All facts, dates, and regulatory actions cited are sourced from primary official sources including SEBI orders and press releases, CBI official statements, NCLT and court records, NSE’s own annual accounts and official disclosures, and the PIB. Settlement and penalty figures are taken from SEBI orders and NSE’s own quarterly accounts disclosures. Nothing in this article constitutes investment advice. The author and FiscalZenith are not responsible for any damages or losses.