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NSE IPO Can Proceed With Full Risk Disclosure, Says Legal Expert

A legal expert states the National Stock Exchange's IPO can proceed despite unresolved regulatory cases, provided there is full disclosure of all pending risks in the offer documents. SEBI has granted a no-objection certificate, allowing the exchange to finalize its IPO structure. The main dispute involves the co-location facility, where some traders allegedly gained an unfair advantage by receiving data milliseconds earlier. NSE's Managing Director expects the draft prospectus to be ready within the next three to four months.

Key Points: NSE IPO: Legal Expert Stresses Full Disclosure of Pending Cases

  • SEBI grants NOC for NSE IPO
  • Full disclosure of co-location case risks required
  • IPO and regulatory disputes are parallel processes
  • Draft papers expected in 3-4 months
2 min read

Full disclosure of all pending cases, risks in NSE IPO must for investors' safety: Legal expert

Legal expert says NSE IPO can proceed despite co-location case if all risks are fully disclosed in offer documents for investor safety.

"What matters most is full and timely disclosure of all pending cases and risks in the IPO documents. - B. Shravanth Shanker"

New Delhi, Jan 31

As the National Stock Exchange gets ready to file its long-awaited initial public offering draft papers in the next 3-4 months, a leading legal expert on Saturday said what matters most is full and timely disclosure of all pending cases and risks in the IPO documents.

The capital markets regulator SEBI on Friday gave no-objection certificate (NOC) to the NSE, and the exchange can now finalise the structure and timing of its IPO.

Supreme Court advocate B. Shravanth Shanker told IANS that the long-pending NSE IPO can go ahead even as regulatory cases related to the co-location and dark fibre issues remain unresolved, provided "there is full and timely disclosure of all risks and pending matters in the offer documents".

He said the IPO process and the settlement of regulatory disputes are two parallel procedures and do not legally block each other.

"What matters most is full and timely disclosure of all pending cases and risks in the IPO documents," Shanker told IANS, adding that SEBI works on the principles of accountability and transparency, and these are ensured mainly through clear disclosures to investors.

Speaking on SEBI's decision to grant an NOC for NSE IPO, Shanker explained that the main dispute relates to the placement of brokers' servers alongside the exchange's systems under the co-location facility.

"This arrangement allegedly allowed some traders to receive market-sensitive data a few milliseconds earlier, giving them an unfair advantage in high-frequency trading," he stated.

"Even a small time difference can have a major impact in financial markets, making the issue serious from a regulatory point of view," he noted.

NSE's IPO plans were earlier stalled due to the dark fibre and co-location case.

Meanwhile, speaking to IANS, Ashishkumar Chauhan, Managing Director and Chief Executive Officer of the NSE, said on Saturday that the draft papers will take 3-4 months for the Draft Red Herring Prospectus (DRHP) to be made. He also informed that along with preparing the DRHP, NSE will also work in parallel on the offer for sale (OFS) part of the IPO.

- IANS

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Reader Comments

R
Rohit P
Finally some movement on this! NSE IPO has been talked about for years. The co-location issue is serious, but if it's fully disclosed, the market can price in the risk. Hoping for a fair valuation for retail investors.
A
Aman W
I have my doubts. "Full disclosure" sounds good on paper, but will the average retail investor truly understand the legal and financial implications of these pending cases? The language in prospectuses is often complex. More investor education is needed alongside this.
S
Sarah B
As someone new to Indian markets, this is concerning. The article mentions an "unfair advantage" for some traders. If the institution itself faced such issues, how can we be sure of its governance now? The IPO success will depend heavily on restoring that trust.
V
Vikram M
This is a landmark moment for Indian capital markets. NSE is our homegrown success story. While past issues must be addressed, we shouldn't let them overshadow the exchange's contribution. Cautiously optimistic! 🇮🇳
K
Karthik V
The expert says IPO and dispute settlement are parallel procedures. That's technically correct, but for investor confidence, they shouldn't be. SEBI should have insisted on a clearer resolution first. Granting NOC feels a bit rushed, no?

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