Shares of BSE fell 3.24% from the intraday high of Rs 3,412 to Rs 3,301.20 apiece on the NSE on Thursday, August 20, after a report suggested that the National Stock Exchange of India (NSE), which is preparing to launch its initial public offering (IPO), may allow its shares to trade on its own platform after listing on rival BSE.
According to a Bloomberg report, the possibility of NSE shares trading on its own platform had been discussed with global investors during recent roadshows for the exchange’s proposed IPO. Under the proposal, NSE shares could trade in the “permitted to trade” category even though the stock would formally be listed on BSE. The move, if approved, could eventually shift trading volumes and pave the way for NSE shares to be included in the exchange’s benchmark indices.
BSE shares opened nearly 1% higher at Rs 3,384 apiece on the NSE on Thursday, against the previous close of Rs 3,352. The stock then gained 1.78% to hit an intraday high of Rs 3,412 apiece before paring gains.
At 2:03 PM, BSE shares were trading at Rs 3,308.70 apiece, down 1.29% from the previous close. At the same time, the benchmark NSE Nifty50 was trading 156 points, or 0.65%, higher at 24,234.
Current regulations do not provide for the self-listing of a stock exchange. NSE, which is classified as a market infrastructure institution, would need approval from the Securities and Exchange Board of India (Sebi) to allow its shares to trade on its own platform.
The “permitted to trade” framework allows securities to trade on the NSE without being formally listed on the exchange, while their compliance and disclosure obligations remain unchanged, according to the NSE website.
NSE revised its index eligibility rules in 2019 to allow such securities to qualify for inclusion in the Nifty indices, India’s most widely followed equity benchmarks. Previously, only shares formally listed and traded on the exchange were eligible.
About 250 companies that are not listed on NSE currently trade on its platform under the permitted-to-trade category. These include Elantas Beck India, Goodyear India, and Novartis India.
The arrangement could give NSE shares access to liquidity on both exchanges while retaining BSE as the primary listing venue.
NSE IPO is expected to be one of India’s most closely watched public offerings, with the exchange seeking a valuation of as much as Rs 5.26 lakh crore ($55 billion).
NSE has already filed its draft papers with Sebi and expects to receive the regulator’s approval by the end of August. The exchange is targeting an IPO launch in the second half of September, according to media reports.