What’s Happening?
The entire episode of governance issues and system lapses in India’s premium stock exchange has raised eyebrows. SEBI (Securities and Exchange Board of India) is conducting an investigation on NSE’s former officials for the alleged violation. Income tax and CBI has also initiated a probe against former CEO Chitra Ramkrishna.
The scam revolves around NSE’s co-location facility (used by algo traders). It’s alleged that one of the trading members, OPG Securities, was given preferential access between 2012 and 2014 to log in and get data before others in the co-location facility. They used this opportunity to be ahead of others in the order execution. This scam came to light in 2015 after a whistleblower complaint to SEBI. For now, SEBI is unlikely to give its nod to the NSE IPO because it will take another year to clean up the system.
NSE IPO would have come a decade ago, but the series of controversies has delayed it. However, in the grey market the stock market has risen from Rs 850 to Rs 3,400 in the past two years. Since NSE’s financial track record has been exceptionally good, there are no sellers in the grey market.
Should This Concern You?
NSE is the leading stock exchange in India and the fourth-largest in the world. NSE’s scam was done by its former officials, other than that there’s no big threat surrounding the exchange. NSE’s net profit jumped over five times in the December quarter to Rs 1,348 crore as compared to Rs 208 crore reported in the same quarter in 2020. So far, NSE’s earnings have been robust due to the burgeoning equity market and an influx of new investors. All NSE is waiting now is for the final verdict in the co-location case.
What Lies Ahead?
NSE’s IPO will take one more year. Until the co-location case is settled, NSE cannot come up with its public listing. Currently, several companies are also delaying their IPOs due to LIC. According to media sources, LIC IPO will be live by mid-March.
