NSE MAY HAVE TO REFILE PAPERS FOR ₹10,000CR IPO

MUMBAI: The National Stock Exchange (NSE) may have to refile papers for its ₹10,000-crore initial share sale after resolving the issue of some brokers allegedly getting preferential access to its trading systems, a development that could push the share sale to next year.

The case which forced India’s largest stock exchange to conduct a forensic audit and brought its current and former officials under the lens is a “serious matter”, Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi said on Monday. Resolving the issue could delay the IPO, the largest since stateowned Coal India raised ₹15,200 crore in 2010.

“If I was an issuer, I will see that these are addressed and then only go back to draft red herring prospectus,” Tyagi said on the sidelines of an event organised by the Standing Conference of Public Enterprises, reported.

Separately, a person aware of the matter said Sebi was “not keen” at looking at the NSE IPO until the unfair access issues are resolved. “In a letter on 31 May, Sebi asked NSE to stop working on the IPO,” this person added, asking not to be identified. “The issue is far from resolved as Sebi is yet to appoint a forensic auditor to look into the aspects of collusion and ill-gotten gains.”

In 2015, a whistleblower alerted Sebi to some brokers who had placed their servers in the same location as NSE’s, getting faster access to its trading systems. A Sebi panel investigated the matter and found NSE’s systems were prone to manipulation. In September 2016, Sebi ordered NSE to conduct a forensic audit of its systems and place revenues from its co-location services in an escrow account. In December, NSE filed its draft IPO papers, mentioning risks from the unfair access issue. It planned to open the IPO at the start of the April-June quarter after resolving the unfair access allegations. After a June 21 Sebi board meeting, chairman Tyagi said the regulator had started investigating possible connivance between NSE employees and brokers.

An NSE spokesperson did not respond to an e-mail seeking comment. Twenty-seven NSE shareholders plan to sell shares in the IPO, adding up to a 22.5% stake.