1 week ago
SEBI Weighs NSE Liquidity Before Allowing Own-Share Trading
NSE wants its shares to be traded on its own trading platform.
SEBI must first decide whether this should be allowed.
The permission being considered is called Permitted to Trade, or PTT.
PTT would let people trade the shares on NSE without NSE formally listing them there.
Current rules generally prevent an exchange from listing its own shares on its platform.
Analysts think trading could become more concentrated on NSE if PTT is approved.
Regulators are concerned about fairness, supervision, pricing, and conflicts of interest.
NSE is also preparing an IPO in which existing investors would sell shares, but NSE itself would not receive the money.
SEBI is expected to assess liquidity and other implications before deciding whether to grant NSE Permitted to Trade status.
PTT could allow NSE shares to trade on its platform without the exchange formally listing them there.
Under current rules, NSE shares must be listed on another exchange, potentially BSE, because self-listing is prohibited.
Analysts say PTT could concentrate transactions and liquidity on NSE while reducing activity on the exchange where it is formally listed.
NSE’s proposed IPO involves an offer for sale of up to 148.9 million shares, or nearly 6% of the company, by existing institutional shareholders.
- Who
- The Securities and Exchange Board of India, the National Stock Exchange, and its existing institutional shareholders are involved.
- What
- SEBI is considering whether NSE should receive Permitted to Trade status for its shares, alongside reviewing NSE’s proposed IPO.
- Where
- The shares could trade on the NSE platform, while current rules require formal listing on another exchange, such as BSE.
- When
- The report was published on August 23, 2026; NSE filed its DRHP in June 2026 and approved the IPO proposal on February 6, 2026.
- Why
- SEBI wants to assess liquidity, market surveillance, conflicts of interest, price discovery, and other consequences before deciding.
Potential Liquidity Benefits
Regulatory and Market Concerns
Where trading would occur
Potential Liquidity Benefits
Market analysts say PTT could lead to more transactions taking place on NSE, potentially increasing liquidity there.
Regulatory and Market Concerns
SEBI is expected to examine whether trading on NSE would reduce liquidity on the exchange where NSE is formally listed.
Exchange self-trading
Potential Liquidity Benefits
PTT would provide a way for NSE shares to trade on NSE without formally listing the exchange on its own platform.
Regulatory and Market Concerns
Critics of changing the framework could raise concerns about market surveillance, conflicts of interest, and price discovery because NSE would be both issuer and platform operator.
Formal listing requirement
Potential Liquidity Benefits
If approved, PTT could offer an alternative to formal self-listing while allowing NSE shares to be traded on its platform.
Regulatory and Market Concerns
Under current regulations, NSE must list its shares on another exchange, with BSE identified as its rival and already listed since 2017.
Key facts
- Regulator
- The Securities and Exchange Board of India is expected to evaluate the PTT proposal.
- PTT meaning
- Permitted to Trade would allow NSE shares to trade on NSE without formal listing there.
- Current restriction
- The Securities Contracts (Stock Exchanges and Clearing Corporations) Regulations, 2018 prohibit an exchange from listing on its own platform or an associate’s exchange.
- Proposed IPO
- The IPO consists entirely of an offer for sale of up to 148.9 million equity shares, nearly 6% of NSE.
- Estimated issue value
- Based on an unlisted-market valuation of about ₹5 lakh crore, the issue could be worth up to ₹30,000 crore.
- IPO proceeds
- NSE would receive no proceeds because existing institutional shareholders would sell the shares.
- DRHP status
- NSE filed its draft red herring prospectus in June, but SEBI’s observations remain pending changes expected from an existing shareholder.
Quotes
A highly placed source
An unnamed source familiar with SEBI’s consideration of NSE’s proposed PTT status
“A call can be taken after considering all the pros and cons of permitting trade, including the liquidity aspect”
thehindubusinessline.com
“Once this change is added in DRHP, then it can be processed further”
thehindubusinessline.com
Sources
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