NSE IPO DRHP: ₹1,491 crore settlement proposed for co-location, dark fibre cases
Synopsis
NSE's IPO prospectus has put a number on its two biggest regulatory albatrosses: a combined ₹1,491.21 crore settlement offer to SEBI covering the co-location and dark fibre disputes. With Supreme Court appeals still live and final approval pending, the unresolved cases are now a material disclosed risk for every prospective NSE investor.
Key Takeaways
NSE has proposed a combined settlement of ₹1,491.21 crore to SEBI to resolve its co-location and dark fibre disputes, disclosed in its DRHP .
In the dark fibre case, the revised settlement offer stands at ₹267.65 crore (revised in March 2026 ); the original SEBI disgorgement order was for ₹62.58 crore .
In the co-location case, NSE's revised settlement offer is ₹1,223.56 crore (revised in March 2026 ); SEBI's original disgorgement order was for ₹624.89 crore .
Both SAT rulings — which largely favoured NSE — have been challenged by SEBI before the Supreme Court , where appeals remain pending.
NSE's actual additional cash outflow may be lower, as deposits with SEBI already stood at approximately ₹1,107 crore as of August 2024 .
The National Stock Exchange of India (NSE) has disclosed in its draft red herring prospectus (DRHP) that two long-running regulatory disputes — linked to its co-location facility and dark fibre infrastructure — remain unresolved, with the exchange proposing a combined settlement of ₹1,491.21 crore to the Securities and Exchange Board of India (SEBI). The disclosures, filed as part of the material litigation section of NSE's IPO papers, cover proceedings still pending before the Supreme Court, SEBI, and other judicial forums.
The Dark Fibre Dispute
In the dark fibre matter, regulators raised concerns that certain trading members were granted preferential point-to-point connectivity through an unauthorised service provider, allegedly giving them a latency advantage over other market participants. A SEBI Whole-Time Member (WTM) in April 2019 directed NSE to disgorge ₹62.58 crore along with interest and ordered periodic audits of the exchange's network architecture.
SEBI subsequently imposed an additional penalty of ₹7 crore in June 2022 through a separate adjudication proceeding. Both orders were later set aside by the Securities Appellate Tribunal (SAT), prompting SEBI to challenge the rulings before the Supreme Court. While those appeals remain pending, NSE submitted a settlement proposal of ₹222.66 crore in June 2025, which was revised upward to ₹267.65 crore in March 2026. The application is yet to receive final approval.
The Co-location Case
The second dispute centres on allegations that certain trading members received preferential access and early connectivity through NSE's co-location facility operating under its tick-by-tick architecture. In April 2019, SEBI ordered NSE to disgorge ₹624.89 crore along with interest and issued non-monetary directions. Notably, the regulator simultaneously held that NSE had not violated the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.
SAT, in January 2023, overturned the disgorgement order and ruled that NSE had not breached key provisions of the Stock Exchanges and Clearing Corporations Regulations. However, it directed the exchange to deposit ₹100 crore into the Investor Education and Protection Fund (IEPF). In a separate ruling, SAT also quashed a ₹1 crore penalty imposed by SEBI. SEBI challenged both SAT orders before the Supreme Court.
To resolve the co-location dispute, NSE proposed a settlement of ₹1,164.73 crore in June 2025, later raising the offer to ₹1,223.56 crore in March 2026. Both the Supreme Court appeals and the settlement applications in this matter remain pending, according to the DRHP.
Net Cash Outflow May Be Lower
The combined revised settlement figure across both cases stands at ₹1,491.21 crore. However, NSE's actual additional cash outflow could be considerably lower, as the exchange has already deposited substantial sums with the market regulator. According to NSE's financial disclosures published in August 2024, deposits with SEBI stood at approximately ₹1,107 crore at that point.
What This Means for the NSE IPO
The unresolved regulatory cases represent a material overhang on NSE's long-awaited initial public offering. This is the first time the full financial contours of both settlement proposals have been publicly disclosed together, giving prospective investors a clearer — if still uncertain — picture of the exchange's contingent liabilities. How SEBI and the Supreme Court ultimately rule will directly shape the final settlement quantum and the timeline for NSE's listing.
Point of View
And from ₹1,164.73 crore to ₹1,223.56 crore in the co-location case — suggests the exchange is keen to draw a line before listing, even at a higher cost. What mainstream coverage misses is the asymmetry here: SAT largely sided with NSE, yet SEBI's Supreme Court appeals keep the uncertainty alive. That litigation overhang, not the settlement quantum itself, is the real variable that IPO investors must price.
NationPress
12 Aug 2026
Frequently Asked Questions
What are the NSE co-location and dark fibre cases about?
The co-location case involves allegations that certain trading members received preferential early access through NSE's co-location facility, giving them a speed advantage in executing trades. The dark fibre case relates to claims that select members were provided unauthorised point-to-point connectivity through a third-party provider, again allegedly conferring a latency edge over other participants.
How much has NSE proposed to pay to settle these cases?
NSE has proposed a combined settlement of ₹1,491.21 crore to SEBI — ₹1,223.56 crore for the co-location dispute and ₹267.65 crore for the dark fibre matter, both revised upward in March 2026. The settlement applications are yet to receive final approval.
What did the Securities Appellate Tribunal rule in these cases?
SAT set aside SEBI's disgorgement and penalty orders in both cases. In the co-location matter (January 2023), SAT overturned the ₹624.89 crore disgorgement order and ruled NSE had not breached key regulations, though it directed a ₹100 crore deposit into the Investor Education and Protection Fund. In the dark fibre case, SAT similarly set aside SEBI's orders.
Why are the cases still unresolved if SAT ruled in NSE's favour?
SEBI challenged both SAT rulings before the Supreme Court, where the appeals remain pending. Until the Supreme Court rules or a settlement is formally approved, the regulatory uncertainty continues — making these cases a material disclosed risk in NSE's IPO prospectus.
How does this affect NSE's IPO?
The unresolved cases represent a contingent liability that prospective investors must factor into their valuation of NSE. The DRHP discloses the combined ₹1,491.21 crore settlement figure, but the actual additional outflow could be lower given the approximately ₹1,107 crore already deposited with SEBI as of August 2024.
