Fresh legal snag may delay NSE’s long-awaited public debut

Mumbai: India’s largest bourse, the National Stock Exchange of India (NSE), has hit another roadblock in its decade-long journey to go public. A writ petition has been filed in the Delhi High Court challenging the no-objection certificate (NOC) issued by the Securities and Exchange Board of India (Sebi) for NSE’s proposed initial public offering (IPO). The petition, filed on February 10 by New Delhi resident and former judicial officer KC Aggarwal, 72, questions Sebi’s January 30 clearance and could delay NSE’s much-anticipated listing once again. ET has reviewed the petition.

The exchange has been trying to go public since 2016, but repeated regulatory scrutiny and past controversies have kept the plan on hold. The Delhi High Court is expected to take up the matter on Monday or later this week, with its decision likely to influence the next steps in NSE’s listing saga.

At the heart of Aggarwal’s petition is Sebi’s framework on Corporate Action Adjustments (CAA), introduced to ensure “value neutrality” in derivatives trading during bonus issues, stock splits and extraordinary dividends. In simple terms, it means derivative traders’ economic positions should remain unchanged before and after such corporate actions. Aggarwal alleges that NSE violated this framework. Instead of adjusting both price and quantity, NSE changed only prices, debiting dividend-equivalent amounts directly from derivative traders’ accounts, including that of Aggarwal. Under the Securities Contracts (Regulation) Act, dividends belong only to shareholders, not derivatives traders.

“The impugned debit is therefore ultra vires the statute,” he said in the petition.

Aggarwal said his complaints to NSE were closed without a hearing, and Sebi upheld the exchange’s actions without independent review. Right to Information (RTI) requests seeking details of the debited funds were repeatedly rejected, creating a “complete information vacuum” and emails to the Sebi chairperson remained unaddressed as of January 2026, he added.

His complaint to Sebi outlined how funds were misappropriated from derivatives traders under the pretext of CAA in violation of Sebi rules, the impermissibility of off-market derivative transactions and the serious implications for investor protection and market integrity. He had asked that Sebi not grant any approval for NSE’s IPO until the matter was fully investigated and addressed.

Despite unresolved statutory violations, opaque fund flows and systemic concerns, Sebi cleared NSE’s IPO, Aggarwal said. The writ seeks “regulatory accountability, enforcement of statutory and circular-based duties, and an interim restraint to prevent irreparable prejudice to public investors.” Sebi didn’t respond to queries on the matter.

The market regulator’s January 30 NOC allows NSE to formally kick off the IPO process–appoint bankers and legal advisers and start drafting the listing documents.

The wait for the exchange’s IPO has been one of India’s most prolonged and closely watched, with the first application submitted to Sebi on October 18, 2016. The regulator initially withheld approval due to concerns related to a co-location case, governance lapses at the bourse, and issues with its technology infrastructure. Since then, NSE has repeatedly approached Sebi for clearance. After Tuhin Kanta Pandey took charge as Sebi chief in March 2025, he formed an internal committee to examine the NSE IPO issue.