Ashish Kumar Chauhan, Managing Director and CEO of the National Stock Exchange (NSE), has clarified that the exchange has not filed any application with the Securities and Exchange Board of India (SEBI) to allow its own shares to be traded on its platform.
NSE IPO Details Emerge
Chauhan's statement precedes the launch of the highly anticipated NSE initial public offering (IPO). The exchange has set a price band of Rs 1,700-1,785 per share for the public issue, which is structured entirely as an offer for sale (OFS).
Existing shareholders plan to divest 12.64 crore equity shares, representing approximately a 5.11% stake in the exchange. This marks a reduction in the OFS size, which was initially proposed to be 14.9 crore equity shares in the draft prospectus.
At the upper end of the price band, the NSE IPO is projected to raise around Rs 22,568.92 crore. This figure is lower than the initial expectation of over Rs 30,000 crore. Chauhan emphasized that the pricing of the issue was solely based on the advice provided by merchant bankers.
Regulatory Framework and Market Dominance
Under current SEBI regulations, a stock exchange is prohibited from allowing its own shares to be traded on its platform. Consequently, shares of the Bombay Stock Exchange (BSE) are traded on the NSE. Similarly, NSE shares will be required to list on a rival exchange.
The NSE commands a significant presence in India's equity market. It holds a cash market share of 93.05%, an equity futures market share of 99.72%, and an equity options share of 68.48%.
Financial Performance and Revenue Diversification
For the fiscal year ending March 2026, the NSE reported a net profit of Rs 10,302 crore on a revenue of Rs 16,601 crore. Transaction charges constituted 70% of its revenue last year, a decrease from 79% five years prior.
Ian De Souza, CFO of NSE, highlighted the growth in new revenue streams such as data and connectivity, and indices, which collectively account for 11% of the revenue. These new lines are expanding at a faster pace, gradually reducing the exchange's reliance on transaction charges.
De Souza also noted the strong growth trajectory of the Indian economy and the relatively low market cap-to-GDP ratio compared to developed markets, indicating a substantial runway for continued growth in transaction charges.
Key Shareholders Participating in OFS
Several prominent entities are paring their stakes in the NSE IPO, including the State Bank of India, state-owned insurance companies like GIC, National Insurance, and United India Insurance, as well as Bank of Baroda, Stock Holding Corporation, and foreign funds such as Aranda Investments and Canada Pension Plan Investment Board.
Ashish Kumar Chauhan previously played a pivotal role in taking the BSE public, and the upcoming NSE IPO will place him in a unique position of having led the public listing of two of India's largest exchanges.