NSE IPO: Exchange eyes revenue diversification beyond options trading

NSE management says new businesses, SIFs, commodities and ETFs could diversify revenue, while clarifying it has not sought permission to trade its shares on NSE

The National Stock Exchange (NSE) is working on diversifying its income streams with more businesses in the portfolio, the exchange’s management said on Friday, during the announcement of its long-awaited initial public offering (IPO), scheduled to open for public subscription on September 17.

 

The IPO is a complete offer for sale of 126.4 million shares by shareholders such as State Bank of India (SBI), SBI Capital Markets, MS Strategic (Mauritius), Bank of India, Stock Holding Corporation of India, General Insurance Corporation of India, among others.

 

The issue, priced in the range ₹1,700 to ₹1,785 per share, will open for anchor investments on September 16. Other investors will be able to bid from September 17 to September 21. The issue size is pegged at over ₹22,500 crore, at a valuation of around ₹4.42 trillion at the upper end of the price band.

 

 

Addressing media queries on dependence on transaction charges through derivatives trading in operating revenue, NSE’s Managing Director and Chief Executive Officer (MD & CEO), Ashishkumar Chauhan, said, “Now other businesses are coming up and hopefully we will be able to even further diversify.”

 

“In FY26 numbers, 90 per cent of our total revenue is operating revenue. And within that operating revenue, 60 per cent from options. But within options, if you look at the breakup, 46 per cent comes from the index options, 6 per cent comes from monthly index options, and 8 per cent comes from single stock options. In monthly options and single stock options, our market share is close to 100 per cent,” said Sriram Krishnan, NSE’s chief business development officer.

 

The management added that they could benefit from the emergence of specialised investment funds (SIFs), expansion of commodity segment, and growth in the exchange-traded funds (ETFs).

 

“Our innovation is going to be a form of investment. As the country evolves, as the market policy evolves, we are going to get more demands from market participants. Sebi has introduced a framework called SIFs. One of the objectives of SIF is to bring retail investors through this framework into equity derivatives, which is a better way of managing risk because retail investors do not know much about options trading,” the management stated.

 

It clarified that the exchange had not made any application to the markets regulator Securities and Exchange Board of India (Sebi) to allow the shares to be traded on NSE.

 

The shares will be listing on BSE. All pre-IPO investors will have a six month lock-in period.

 

On measures such as closing auction session (CAS), which have impacted volumes in the derivatives segment, Chauhan said, “There have been many times when Sebi has taken measures which the industry thought were tough — and kind of opposed those measures. Later on, it was found that because of those measures more people came to the market because more people thought it was safe.”

 

On queries on the reduction in the OFS size, Chauhan said, “Regulations give a particular minimum amount of shares to be given in the OFS or IPO — without which one cannot do the IPO. We got that number on the day of filing of updated DRHP — sufficient for us to go live with the IPO. NSE has no promoter — it is fully owned by the public. So after the first six months’ period, it will have a 100 per cent free float.” 

 

“After all the deliberations, discussions, roadshows over the last two months, our merchant bankers have advised us on this price,” Chauhan said, responding to queries on the valuations.

 

“Its ‘one stop platform’ structure, with cross-segment margin fungibility, optimises capital usage and lowers funding requirements for participants across all segments, thereby improving overall market efficiency,” stated Motilal Oswal Financial Services in its note on the IPO, detailing the expansion by the exchange in diversified product portfolio such as electronic gold receipts, 10-gram gold futures, Brent crude oil futures, electricity futures, and Indian natural gas futures.

 

Among key risks, Samco Securities’ Equity Research Analyst Raj Gaikar highlighted that the exchange’s nearly four-fifths of revenue is transaction charges while three-quarters of that is options.

 

He further hinted that the fall in equity options market share over the last two years and top 10 trading members contributing to nearly half of the revenues were key risks.