NSE seeks an extension of six months from Sebi to pare NSDL stake

Timeline to comply with Sebi regulations ends on October 2

The National Stock Exchange (NSE), the country’s top bourse, has requested a six-month extension from the capital markets regulator to reduce its shareholding in the National Securities Depository (NSDL), according to people with direct knowledge of the matter.

This request comes as the Securities and Exchange Board of India (Sebi) has put NSDL’s estimated Rs 3,000 crore initial public offering (IPO) in abeyance.

Five years ago, Sebi had directed any entity holding more than 15 per cent in a depository to pare their holding before October 2, 2023.

As of now, NSE and IDBI Bank hold 26.1 per cent and 24 per cent in NSDL, which is the country’s largest depository in terms of assets under custody.

 

In the proposed IPO, IDBI plans to dilute an 11.1 per cent stake, while NSE is diluting a 9 per cent stake to comply with Sebi regulations.

A source familiar with the matter stated, “NSE wants to abide by the regulations and has filed the draft red herring prospectus (DRHP) for NSDL to bring down the shareholding. We have now placed a request for an extension.”

According to insiders, NSE has requested an extension until April 2024 to comply with the regulations.

“NSE has submitted a request, and the exchange is coordinating with Sebi on compliance,” another source said.

Queries sent to NSE and NSDL did not yield any responses.

NSDL had submitted its DRHP to Sebi on July 7. In addition to NSE and IDBI Bank, four others are also looking to reduce their holdings in the depository.

Investment banking sources have stated that the regulator suspends any IPO when there is a pending regulatory investigation or if the requested information from the company or other regulatory bodies is not received on time.

Typically, an issue is held in abeyance for 90 days. Earlier reports indicated that bankers had requested a reduction in the abeyance period to 45 days to allow NSE and IDBI Bank to sell their stakes within the stipulated time frame.

In June, BSE diluted approximately 5 per cent of its stake in the Central Depository Services by selling shares in the open market to comply with the norms.