National Stock Exchange Of India Ltd Forensic Report - SOIC x StockScans Report

as of Sep 2026

National Stock Exchange Of India comes to its IPO as the dominant market infrastructure institution in India with substantial operating revenues. Three areas demand close scrutiny: mounting regulatory settlement costs reaching ₹1,491.21 crore to resolve past colocation disputes, prolonged governance lapses that left the board chair vacant for 651 days and drew penalties from the company registrar, and unprovided legal claims alongside ₹8,973.27 crore in bank guarantees. Furthermore, the issue is an offer for sale (an IPO where existing shareholders sell their own shares and keep the proceeds), meaning zero money enters the exchange itself.

Key findings

  1. Regulatory settlements and colocation terms require ₹1,491 crore in cash outflows Major - The exchange set aside ₹1,391.21 crore in other expenses during Fiscal 2026, on top of ₹100 crore provided earlier, to settle long-running investigations into unfair server access (colocation) and high-speed data lines (dark fibre). On 13 March 2026, the company submitted revised settlement terms of ₹1,491.21 crore to SEBI to resolve these matters. Independent examiners included an emphasis of matter (an auditor note highlighting a critical uncertainty) in their reports for Fiscals 2024, 2025, and 2026 regarding these pending appeals. These proceedings follow earlier settlement payouts, including ₹643.05 crore on 4 October 2024 for trading access point lapses and ₹72.65 crore in June 2023 for a complete trading halt.
  2. Board vacancies and statutory breaches resulted in penalties against senior officers Major - The post of board chairperson sat vacant for 651 days from 28 November 2023 until 9 September 2025. Following director term expirations, the board functioned with only four directors and lacked a woman director for 147 days until 23 April 2024, while its nomination committee lacked the required independent members for 157 days. On 5 February 2026, the Registrar of Companies penalised the exchange, its managing director, former finance chief, and former company secretary for these corporate governance violations. Routine regulatory inspections also highlighted persistent internal control gaps, such as missing access controls and delays in releasing corporate announcements.
  3. Unprovided compensation claims and ₹8,973 crore in guarantees pose contingent liabilities Major - Metropolitan Stock Exchange filed an ₹856.99 crore compensation claim against the company, which the Supreme Court stayed with zero financial provision recognized on the exchange balance sheet. The exchange also faces an order to compensate bank lenders with 10% annual interest over the Karvy broker default, which remains stayed by the Supreme Court without any provision. Total contingent liabilities (bills the company might have to pay if ongoing disputes go against it) include ₹1,032.25 crore in disputed tax demands as of 31 March 2026. Outstanding bank guarantees stood at ₹8,973.27 crore on 31 March 2026, including ₹8,500 crore issued to back trade settlement across exchanges.
  4. Risk reserves were transferred to profits while Core SGF contributions ceased Minor - The exchange transferred ₹3,728 crore from its risk reserve back into accumulated profits in Fiscal 2026, lowering the reserve to ₹4,805 crore. Direct contributions from trading revenue to the core settlement guarantee fund (a emergency pool to cover broker defaults) dropped from ₹1,740.97 crore in Fiscal 2024 to ₹0.58 crore in Fiscal 2026 after the board ended voluntary funding on 1 January 2025. These capital shifts coincided with total dividend payouts of ₹4,455 crore in Fiscal 2025 and ₹8,662.50 crore in Fiscal 2026.
  5. Recurring technical outages and testing gaps attracted regulatory fines Minor - A market-wide system failure on 24 February 2021 halted all trading for 5 hours and 24 minutes. The regulator levied a ₹6.04 crore financial penalty for an equilibrium pricing technical glitch on 25 April 2024, which the exchange paid in May 2026. Multiple technical disruptions occurred across Fiscals 2024 to 2026, including risk engine crashes on 30 April 2026 and broker disconnects on three separate trading days in 2024. On 9 May 2025, the regulator issued a warning letter because the exchange failed to conduct comprehensive security testing and failed to fix cybersecurity audit findings within the three-month deadline.
  6. Derivatives trading and top brokers account for the majority of revenue Minor - Transaction charges from equity options trading generated ₹9,997.57 crore or 60.22% of total operating revenue in Fiscal 2026, following 59.47% in Fiscal 2025 and 64.62% in Fiscal 2024. Revenue is also concentrated among intermediaries: the top ten trading members generated 46.78% (₹7,765.58 crore) of operating revenue in Fiscal 2026. On 1 April 2026, the central government increased securities transaction tax on futures sales from 0.02% to 0.05% and on options sales from 0.10% to 0.15%, alongside rules restricting weekly contracts.
  7. Unaudited associate accounts and asset sales inflated reported profits Minor - The main auditor relied on unaudited, management-certified numbers for key associate entities, which contributed ₹112.78 crore to total comprehensive income in Fiscal 2026. Consolidated profits were lifted by one-time investment sale gains of ₹1,209.47 crore in Fiscal 2025 and ₹1,200.94 crore in Fiscal 2026 from selling stakes in companies such as NSDL. Discontinued technology businesses added further one-off post-tax gains of ₹654.03 crore in Fiscal 2025 and ₹114.14 crore in Fiscal 2026.
  8. Four lead investment banks face marketing restrictions due to conflicts Minor - Four merchant bankers (Morgan Stanley India, SBI Capital Markets, ICICI Securities, and 360 ONE WAM) are restricted under SEBI rules to marketing roles only because of corporate ties to selling shareholders. The public issue consists of up to 148,905,525 shares sold entirely by existing investors, meaning the exchange receives no fresh funds. Selling shareholders transferred 2,795,300 shares in secondary private sales during the past three years at an average cost of ₹1,999.36 per share.

What to watch

Bottom line: This is a highly profitable, market-dominating financial infrastructure business coming to market as an investor exit rather than a capital-raising event. The central risks sit in regulatory resolutions, where past colocation probes have driven ₹1,491.21 crore in settlement demands, alongside heavy revenue dependence on options volume now facing higher transaction taxes. Watch for final regulatory orders on the colocation settlement and Supreme Court rulings on stayed compensation claims.