The National Stock Exchange of India (NSE) has detailed in its draft red herring prospectus (DRHP) that it still has two ongoing regulatory issues related to its co-location and dark fibre services. These matters are yet to be resolved, with NSE proposing a payment of Rs 1,491.21 crore to settle with the Securities and Exchange Board of India (SEBI).
The regulatory concerns involve allegations of providing certain trading members with preferential connectivity through unauthorized service providers, potentially granting them an advantage in latency over other market participants. SEBI had directed NSE to disgorge Rs 62.58 crore in April 2019 and imposed a penalty of Rs 7 crore in June 2022, which were later challenged and remain pending before the Supreme Court.
In a separate case concerning co-location facilities, SEBI had ordered NSE to disgorge Rs 624.89 crore in April 2019. However, this order was overturned by the Securities Appellate Tribunal (SAT) in January 2023. NSE was directed to deposit Rs 100 crore into the Investor Education and Protection Fund, and a Rs 1 crore penalty imposed by SEBI was quashed by SAT. NSE has proposed settlement amounts of Rs 1,164.73 crore and Rs 1,223.56 crore in June 2025 and March 2026, respectively, to resolve this matter.
The total proposed settlement amount for both the co-location and dark fibre cases stands at Rs 1,491.21 crore, although the actual cash outflow for NSE may be lower, considering the substantial deposits already made with SEBI as per financial disclosures in August 2024.
