National Stock Exchange aims for IPO in second half of 2018
Photo Credit: Reuters

The new chief executive of India’s National Stock Exchange (NSE) told Reuters he does not expect the bourse’s eagerly awaited listing to take place until the second half of 2018.

The exchange had originally planned to go public this year, in what could be one of India’s biggest ever IPOs.

Vikram Limaye, who took the helm in July after heading infrastructure lender IDFC, said the delayed time frame was dictated by the need to address a regulatory probe into whether NSE employees had provided unfair trading access to select brokers.

NSE has applied to the Securities and Exchange Board of India (SEBI), the market regulator, to settle the issue, which has cast a shadow over the initial public offering that some market participants have said could raise up to $1.5 billion.

Limaye, in an interview with Reuters, said the probe was ongoing and the exchange was awaiting a decision from SEBI on its settlement offer but had yet to hear from the regulator.

At the same time, consultant EY, one of the agencies appointed to look into the case, could submit its report within two weeks, he said. That report would then be presented to the NSE board and to SEBI, which will decide on the final action.

NSE will re-submit its application for an IPO after it has clarity from SEBI.

“I would certainly like to do the IPO as soon as possible but it’s not up to me,” Limaye said. A listing by March would be “very difficult”, and a more realistic time frame would be the second half of next year, he said.

NSE had initially applied for an IPO in December 2016, intending to list by the first half of this year. NSE Chairman Ashok Chawla, in interviews with local media earlier this year, pushed back the deadline to December and later until March.

The repeated delays reflect the difficulties NSE has faced in getting SEBI approval after the exchange disclosed that some brokers had been provided early access to its co-location servers. The servers are placed at the site of exchanges to speed up algorithmic trading.

The exchange appointed Deloitte to look into the case, and the consultant had discovered some brokers had exploited technical loopholes in the NSE’s trading systems to gain first-access to the servers.

However, Deloitte was unable to prove whether NSE employees had colluded with brokers to provide early access.

Sources had told Reuters the NSE’s disclosure contributed to the departure of former CEO Chitra Ramkrishna. Other executives at NSE have since departed, including co-founder Ravi Narain.

NSE’s smaller rival BSE Ltd listed in February, and has seen its stock gain more than a fifth as equity markets have hit record highs amid strong retail inflows and an IPO boom.

Limaye, 51, said he did not expect the delay in the IPO timeline to affect valuations as their business and market share remained strong.

Instead, he said it was important the exchange resolve the probe and alter an outside perception that NSE is insular and opaque.

As part of his priorities, Limaye, a former accountant and banker who has worked at firms like Ernst & Young and Citibank, said he was making it a priority to open communication with stakeholders and improve corporate governance standards.

“We have obviously looked at which areas need to be reviewed, where controls need to be strengthened,” Limaye said.

“I‘m building all the bridges that are required in order to make sure that stakeholder relationships are back to where they need to be.”

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