NSE IPO: The buzz around India’s biggest public issue and why timing is important

The National Stock Exchange (NSE) is set to complete its IPO and list publicly by the end of this month after overcoming regulatory hurdles that had delayed proceedings for nearly a decade. The estimated Rs 30,000 crore public issue, the largest in India's IPO history, has garnered significant attention from both institutional investors and retail audiences.

However, questions remain on whether NSE's shares will be allowed to trade on its own exchange. According to current regulations, SEBI prohibits a stock exchange from listing on its own platform, as this creates a conflict of interest since the exchange must also regulate itself. To circumvent this, NSE can utilize the permitted-to-trade (PTT) route, which would enable the exchange to trade its shares on its own platform without being listed.

In this case, NSE shares would first be listed on the Bombay Stock Exchange (BSE), and then SEBI would review a proposal from NSE's board on how to avoid conflicts of interest if NSE shares are subsequently allowed to trade on its own exchange. If approved, NSE's shares could then trade on its own platform through the PTT route.

This development is important as NSE's shares would benefit from the exchange's dominance in liquidity, cash market volumes, and derivatives volumes. Inclusion in NSE's widely tracked indices like Nifty 500 and Nifty Financial Services would also boost passive mutual fund flows into the stock. Currently, around 250 stocks are not listed on the NSE but can trade on the exchange through this route.