The National Stock Exchange of India Ltd. (NSE) could see its shares traded on its own platform even if the stock exchange’s proposed IPO results in a formal listing on rival BSE Ltd.
The idea was discussed with global investors during recent roadshows for the proposed IPO, reported Business Standard citing people familiar with the matter.
Under the proposal, NSE shares would be formally listed on BSE but could also be traded on NSE under its existing “permitted to trade” framework.
What Is The ‘Permitted To Trade’ Category?
The NSE allows certain securities that are not formally listed on the exchange to trade on its platform through the “permitted to trade” category.
According to information available on NSE’s website, securities covered under the framework remain subject to the relevant compliance and disclosure requirements.
Around 250 companies that are not listed on NSE currently trade through this mechanism. These include Elantas Beck India Ltd., Goodyear India Ltd. and Novartis India Ltd.
The exchange had also changed its index eligibility rules in 2019, allowing securities in the permitted-to-trade category to qualify for inclusion in Nifty indexes. Earlier, only stocks formally listed and traded on NSE could be included.
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Regulatory Approval Needed For NSE Shares
NSE would need approval from the Securities and Exchange Board of India (Sebi) before its own shares could trade on the exchange.
Current regulations do not provide for a stock exchange to self-list its shares. NSE is classified as a market infrastructure institution, making regulatory approval necessary for the proposed arrangement, the people familiar with the matter said.
Discussions on the proposal are continuing, and its implementation would ultimately depend on Sebi’s approval.
BSE Could Remain Formal Listing Venue
If the proposal goes ahead, NSE’s shares would have BSE as their formal listing venue while also being available for trading on NSE.
The arrangement could provide the shares with access to liquidity across both exchanges. It could also eventually open the possibility of NSE shares being included in the exchange’s benchmark indexes, given the rules governing permitted-to-trade securities.
The proposal is being considered as NSE prepares for its much-anticipated public issue.
NSE IPO Timeline
NSE is targeting the launch of its IPO in the second half of September..
The exchange expects to receive Sebi’s approval for its draft prospectus by the end of August, the report noted.
The proposed issue is expected to be closely watched as NSE moves towards becoming a publicly traded company, although the plan to allow its shares to trade on its own platform remains subject to regulatory approval.
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