NSE IPO: Exchange may allow its shares to trade on its own platform

National Stock Exchange of India Ltd. (NSE) may explore allowing its shares to trade on its own platform after formally listing them on rival BSE Ltd., according to people familiar with the matter.

The proposal was discussed with global investors during recent roadshows linked to NSE’s proposed initial public offering (IPO). Under the plan, NSE shares could be placed in the exchange’s “permitted to trade” category while remaining formally listed on BSE.

The discussions are ongoing and any such move would require regulatory clearance.

SEBI approval needed for self-trading plan

Current regulations do not provide for a stock exchange to list its own shares on its trading platform. NSE, as a market infrastructure institution, would therefore need approval from the Securities and Exchange Board of India (SEBI) if it wants its shares to trade on its own platform, the people said.

NSE did not respond to requests for comment.

The “permitted to trade” mechanism allows certain securities to be traded on NSE without being formally listed there. Companies using the arrangement continue to be subject to the relevant compliance and disclosure requirements.

What the permitted-to-trade route means

NSE changed its index eligibility rules in 2019, allowing securities under the permitted-to-trade category to qualify for inclusion in its Nifty indexes. Earlier, only companies formally listed and traded on NSE were eligible.

Around 250 companies that are not formally listed on NSE currently trade through this route. These include Elantas Beck India Ltd., Goodyear India Ltd. and Novartis India Ltd.

If NSE shares are eventually allowed under the same framework, the arrangement could provide access to liquidity on both exchanges while keeping BSE as the formal listing venue.

NSE IPO plans

The possible trading arrangement comes ahead of what is expected to be a closely watched IPO for India’s largest stock exchange.

NSE is expected to receive Sebi’s approval for its draft prospectus by the end of August, according to people familiar with the matter. The exchange is targeting an IPO launch in the second half of September.

Any decision on allowing NSE shares to trade on its own platform will ultimately depend on regulatory approval, with discussions around the proposal still underway.