Co-location issue could delay NSE equity offer

Nod for Rs 10,000-cr IPO after Sebi addresses issue, says Tyagi

The much-awaited initial public offering of equity (IPO) of the National Stock Exchange (NSE) could take time. The Securities and Exchange Board of India (Sebi) said on Wednesday said that approval for it might have to wait till the co-location issue was addressed. “That (IPO) will take time. NSE itself wants the other issue of co-location to (first) get sorted,” said Ajay Tyagi, chairman of Sebi, while addressing the media after the market regulator's board meeting.

The country’s largest stock exchange had filed its offer document with Sebi in December 2016. The issue size is likely to be around Rs 10,000 crore, making it one of the largest IPOs in the domestic market. Typically, Sebi takes two to three months to clear an offer document.

The regulator is probing allegations of preferential access at NSE’s co-location (colo) facility. According to an independent audit, trading systems at the facility were prone to manipulation, allowing certain brokers to access trading data before anybody else. The regulator is yet to decide the next course of action.

Asked about the case’s status, Tyagi said it would take “some time”.

As for the delay in appointing NSE’s managing director and chief executive officer (CEO), Tyagi said this would be done shortly. In February, the exchange proposed Vikram Limaye, MD & CEO of IDFC, to succeed Chitra Ramkrishna, who quit in December 2016. It has appointed J Ravichandran as interim MD & CEO. While the exchange’s shareholders approved Limaye’s appointment and remuneration in March, the regulator has not.

“We sought some additional information, which came to us three-four days ago. We will (now) decide very quickly,” said Tyagi.

Asked what the additional information was, Tyagi said there were two-three queries and since it was between Sebi and NSE, he would not like to comment further.

Sources said one of the queries could be on Limaye’s role in the Board of Control for Cricket in India. Limaye is on the Supreme Court-appointed four-member committee of administrators (COA) to run the affairs of the cricket body. The appointment was on the recommendation of the R M Lodha panel.

“Sebi has wanted some clarity over the dual role Limaye would play on the BCCI panel and as NSE chief. The regulator was apprehensive on whether Limaye would be able to perform both duties simultaneously,” said a source.

Sources added as Limaye’s appointment on the COA was made by the apex court, it could be a lengthy process to recuse from that panel.