NSE CEO Cites Reasons for Listing IPO on Overseas Exchange Instead of NSE

National Stock Exchange (NSE) to List on Alternative Exchange

The National Stock Exchange (NSE) will not list its shares on its own platform when it goes public, in accordance with Indian regulations that prohibit exchanges from self-listing. The exchange's Managing Director and Chief Executive Officer, Ashish Chauhan, stated that as a regulated institution, the NSE cannot regulate itself and must therefore list on another recognised exchange, such as the Bombay Stock Exchange (BSE).

The Securities and Exchange Board of India (SEBI) has granted the exchange a no-objection certificate, clearing the way for its long-pending initial public offering (IPO). The proposed IPO will be structured as an Offer for Sale (OFS), with no fresh capital being raised by the exchange.

The NSE currently has nearly 195,000 shareholders who collectively own 100 percent of the exchange. The exchange will invite existing shareholders to indicate whether they wish to sell shares as part of the IPO. The Draft Red Herring Prospectus (DRHP) will be filed after a few months, and SEBI will review the document and provide further clearance.

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On valuation estimates, Chauhan stated that numbers such as USD 50 billion should be taken "with a pinch of salt." The IPO committee will advise the offer price, taking into account financial performance, industry comparables, growth trends, and broader economic and geopolitical factors.

The listing is largely procedural, aimed at providing liquidity to existing shareholders rather than funding expansion. The exchange is profitable enough to meet its growth plans. Listing enables broader participation and enhances liquidity for shareholders.

Under India's regulatory framework, stock exchanges are not permitted to list on their own platforms due to conflict-of-interest considerations. Chauhan noted that while some global exchanges are listed on their own trading platforms, India's rules do not allow such an arrangement.

Public listing can strengthen transparency and governance, with a wider shareholder base and real-time disclosure requirements. Management decisions are subject to scrutiny by investors and the media. Chauhan cited the example of Life Insurance Corporation (LIC), stating that governance improved after its listing.

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The listing is expected to strengthen transparency and accountability in the exchange's operations, in line with broader principles of openness. India has positioned itself as a cost-effective and inclusive capital market, particularly for small and medium enterprises (SMEs). Listing costs in developed markets can range between USD 20 million and USD 30 million, making smaller public fundraises economically unviable.

In India, companies of varying sizes can access public capital without disproportionate costs, thanks to the market structure supported by government policies and SEBI regulations. The operational traction of India's SME platforms contrasts with international efforts such as London's Alternative Investment Market (AIM), which has struggled in recent years.