Why NSE shares won’t list on NSE: CEO Ashish Chauhan explains; IPO set to be pure OFS

Managing Director and Chief Executive Officer Ashish Chauhan stated that National Stock Exchange (NSE) shares will not be listed on its own platform when it goes public, and emphasized that Indian regulations do not allow stock exchanges to list themselves.

“This is a regulation of India and we have to comply with it,” Ashish Chauhan told news agency ANI, explaining that NSE, as a regulated institution, cannot regulate itself and hence has to be listed on an alternative exchange.

His remarks came after NSE was granted a no-objection certificate by the Securities and Exchange Board of India (Sebi) in January, ending the nine-year wait.

Chauhan also stated that the exchange will need a few months to prepare and file the Draft Red Herring Prospectus (DRHP). Once submitted, Sebi will review the document and decide on the next steps for clearance.

Unlike ordinary exchange-traded entities, market infrastructure institutions such as stock exchanges, warehouses and clearing companies are required to obtain a no-objection certificate from the market regulator before submitting their DRHP.

Where else will NSE be listed?

As per India’s regulatory requirements, NSE cannot be listed on its own platform and will instead have to trade on an alternative exchange such as the Bombay Stock Exchange (BSE) or another recognized exchange.

Some global exchange operators, such as Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), are listed on their own trading platforms, but India’s regulatory framework does not allow such regulation.

While NSE will be listed on another platform, its shares could potentially be traded on multiple platforms, subject to regulatory approvals. According to Chauhan, the IPO will enable wider investor participation and increase liquidity for shareholders.

Will the entire NSE IPO be OFS? Here’s what it means

NSE will not raise any new capital from the proposed IPO. Instead, it will be structured entirely as an Offer for Sale (OFS), meaning existing shareholders will sell some of their shares to the public. This development was previously reported by Mint.

Chauhan told ANI that NSE will first ask its existing shareholders if they want to sell some of their shares in the IPO. Since the issue is structured as OFS, all of the proceeds from the sale will go directly to the shareholders who prefer the sale, not to the company.

Currently, the exchange has around 195,000 (1.95 lakh) shareholders and all of them together own 100% of the exchange.

The NSE chief also stated that the proposed IPO is largely procedural and is aimed at providing liquidity to existing investors rather than financing expansion. He also stated that the stock market is profitable enough to meet his growth plans.

Chauhan had told reporters earlier this month that the stock market could see a 4-4.5% share selloff and this could last up to eight months.