Colo-dark fibre matters: Sebi agrees with NSE settlement in principle

In its application submitted in June 2025, NSE had offered to pay ₹1,388 crore under Sebi's settlement regulations to resolve the colocation and dark fibre matters

The Securities and Exchange Board of India (Sebi) has, in principle, agreed to the proposed settlement of the long-pending colocation and dark fibre cases filed by the National Stock Exchange (NSE), Sebi Chairman Tuhin Kanta Pandey said on Wednesday.

 

Speaking on the sidelines of the AIBI Annual Convention, Pandey said the settlement proposal is currently under examination by Sebi’s internal committees. “It (the settlement) is under the process of our different committees. But in principle, we agree with the settlement,” he said.

 

In its application submitted around June–July 2025, NSE offered to pay ₹1,388 crore under Sebi’s settlement regulations to resolve the colocation and dark fibre matters. If approved, this would be the largest settlement ever reached with the market regulator.

 

 

In the second quarter (July–September/Q2) of 2025–26, NSE recognised a provision of ₹1,297 crore, including interest, towards the settlement of matters related to the colocation and dark fibre cases. The exchange had noted that this provisioning was in addition to the ₹100 crore penalty imposed by the Securities Appellate Tribunal (SAT) in the colocation order passed by a Sebi whole-time member, which had already been adjusted against the amount deposited by NSE with Sebi during 2022–23.

 

The proposed settlement is seen as a key step towards clearing regulatory hurdles for NSE’s long-awaited initial public offering (IPO).

 

Last week, the Sebi chairman said the regulator was likely to issue a no-objection certificate (NOC) for NSE’s IPO within this month. Once the NOC is granted, the exchange will be able to formally initiate the IPO process and refile its draft red herring prospectus after nearly a decade.

 

Market participants said the resolution of the prolonged legal disputes is critical for regulatory approval of the public issue.

 

The colocation case — currently pending before the Supreme Court (SC) — relates to allegations that certain brokers received preferential access to NSE’s trading servers between 2015 and 2016.

 

If Sebi clears the settlement, it will be required to file an affidavit in the apex court to withdraw its appeal in the matter.

 

In January 2023, SAT upheld non-monetary penalties against NSE but set aside a disgorgement order, instead imposing a fine of around ₹100 crore for lapses in due diligence. Later that year, the SC directed Sebi to refund about ₹300 crore to NSE in connection with the case.

 

Amid expectations of a listing, NSE’s shareholder base has expanded sharply. The exchange had 183,621 public shareholders at the end of 2025, of which retail investors accounted for 171,563, collectively holding about a 12.3 per cent stake. Shares of NSE have also gained in the unlisted market over the past week.