NSE co-location case: Settlement is a step away from final approval

An external panel set up by SEBI has recommended that the Stock Exchange of India settle pending legal disputes by paying a little over ₹18 billion ($192.5 million).

The recommendation brings the world's largest derivatives exchange closer to resolving its long-running dispute with the Securities and Exchange Board of India (SEBI). Allegations of governance lapses and that it failed to provide equitable access to all trading members have delayed NSE’s initial public offering for nearly 10 years.

The High-Powered Advisory Committee (HPAC) of the Securities Exchange Board of India (SEBI) has advised a settlement of over ₹1,800 crore in the Stock Exchange’s (NSE) co-location case, according to the sources.

Sources have told CNBC-TV18 that the recommendation of the HPAC would have to get a nod from SEBI’s panel of two whole-time members (WTM) now.

Of these ₹1,800 crore, ₹1,200 crore is likely to be the disgorgement amount, ₹400 crore would be interest, and the remainder would be decided under the settlement terms, according to sources.

The exchange had filed a settlement application with SEBI on June 20 last year, offering ₹1,387.39 crore to close the matter – paving the way for the much-awaited listing. Of this ₹1,387 crore, roughly ₹600 crore has already been transferred to the escrow account.

“The remaining amount would be transferred when the final payment notice comes,” sources tell CNBC-TV18.

Also Read: HCLTech share price target cut, stock downgraded after Q4 earnings, FY27 guidance miss

When contacted, NSE declined to comment on the issue.

The settlement pertains to the co-location case of NSE, which centres on allegations that certain brokers received preferential, faster access to market data, giving them an unfair trading advantage.

The continued litigation around the case had long delayed the NSE’s IPO. However, with NSE applying for settlement last year, the deck for IPO has been cleared.

The panel's recommended amount is more than the ₹13 billion NSE set aside late last year to settle pending cases with the regulator. SEBI would soon issue a demand letter to NSE to deposit the money before issuing an order to finalise the settlement, the two sources said.

NSE last month appointed ​20 banks to manage its IPO, the most selected to manage any public issue in India to date.

As India's largest ​bourse, the NSE is also the country's largest unlisted ​company, with 190,000 investors.

In addition, according to a Reuters report, the appointed banks sent out letters to NSE's current investors inviting them to sell their shares in the offer, with a deadline for expressions of interest on April 27.