Mumbai: The National Stock Exchange of India (NSE) has disclosed in its draft red herring prospectus (DRHP) that two long-running regulatory cases linked to its co-location and dark fibre facilities remain unresolved, with the exchange proposing to pay Rs 1,491.21 crore to settle the matters with the Securities and Exchange Board of India (SEBI).
The disclosures, made as part of the material litigation section of the IPO papers, relate to proceedings pending before the Supreme Court, SEBI and other judicial forums.
In the dark fibre matter, regulators had raised concerns that certain trading members were provided preferential point-to-point connectivity through an unauthorised service provider, allegedly giving them a latency advantage over other market participants.
A SEBI Whole-Time Member (WTM) in April 2019 directed NSE to disgorge Rs 62.58 crore along with interest and ordered periodic audits of the exchange’s network architecture.
Subsequently, SEBI imposed a penalty of Rs 7 crore in June 2022 through a separate adjudication proceeding.
However, both orders were later set aside by the Securities Appellate Tribunal (SAT), prompting SEBI to challenge the rulings before the Supreme Court.
While the appeals remain pending, NSE submitted a settlement proposal of Rs 222.66 crore in June 2025, which was revised to Rs 267.65 crore in March 2026. The settlement application is yet to receive final approval.
The second case pertains to allegations of preferential access and early connectivity granted to certain trading members through NSE’s co-location facility operating under its tick-by-tick architecture.
In April 2019, SEBI ordered the exchange to disgorge Rs 624.89 crore along with interest and issued certain non-monetary directions.
At the same time, the regulator held that NSE had not violated the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.
SAT, in January 2023, overturned the disgorgement order and ruled that NSE had not breached key provisions of the Stock Exchanges and Clearing Corporations Regulations.
However, it directed the exchange to deposit Rs 100 crore into the Investor Education and Protection Fund. In a separate ruling, SAT also quashed a Rs 1 crore penalty imposed by SEBI.
SEBI subsequently challenged both SAT orders before the Supreme Court. To resolve the dispute, NSE proposed a settlement amount of Rs 1,164.73 crore in June 2025, later increasing the offer to Rs 1,223.56 crore in March 2026.
According to the DRHP, both the Supreme Court appeals and the settlement applications in the co-location-related matters remain pending.
Together, the revised settlement proposals in the co-location and dark fibre cases amount to Rs 1,491.21 crore.
The actual additional cash outflow for NSE may be lower, as the exchange has already deposited substantial sums with SEBI.
As per its financial disclosures published in August 2024, deposits with the market regulator stood at around Rs 1,107 crore.
(IANS)
