Why India’s biggest stock exchange is going public

[MUMBAI] India’s largest stock exchange, National Stock Exchange (NSE) of India, is preparing for its own market debut on Thursday (Sep 24) after investors bid for more than five times the shares available in its 226 billion rupees (US$2.4 billion) initial public offering.

The offering was the second-biggest IPO ever in India – the world’s sixth-largest equity market – ranking behind only Hyundai Motor India’s 278.7 billion-rupee IPO in 2024.

The shares were priced at 1,785 rupees each, the top end of the marketed range, valuing NSE at about 4.4 trillion rupees (US$46 billion) and putting it among the world’s most valuable exchange operators. 

In an unusual twist, NSE’s shares will be listed on rival exchange Bombay Stock Exchange (BSE) to comply with Indian regulations.

But why would a stock exchange go public in the first place? Here’s what to know.

How does the NSE make money?

NSE operates platforms spanning stocks, equity derivatives, currencies and debt and earns the bulk of its revenue by charging fees on transactions that pass through its markets.

It has benefited from the rapid expansion of India’s capital markets and the arrival of millions of retail investors in recent years, which have helped drive a surge in trading volumes.

That growth has been particularly pronounced in the derivatives market, especially options, which generate the largest share of NSE’s transaction revenue. The exchange is now the world’s largest derivatives bourse by number of contracts traded.

NSE also makes money from listing fees, market-data subscriptions, index licensing and other market-infrastructure businesses.

One of its subsidiaries manages the Nifty 50, one of India’s main equity benchmarks, and earns fees from licensing its index data to asset managers, banks and institutional investors.

NSE also generates revenue from renting rack space in its data centre to trading firms.

For the fiscal year ended March 2026, the company reported a profit of 103 billion rupees on revenue of 187 billion rupees.

Why would a stock exchange list itself?

Much like any other company, a stock exchange might go public to give existing shareholders an easier way to buy and sell their stakes, establish a transparent market valuation or allow the company to raise capital to fund its expansion.

Although historically many exchanges were owned by the brokers who traded on them, that model began to change in the 1990s as exchanges increasingly became commercial, for-profit businesses, with some subsequently listing their own shares.

CME Group, Nasdaq, Intercontinental Exchange, Deutsche Boerse and London Stock Exchange, for example, are all publicly traded.

India followed a similar path after the government allowed foreign investors to acquire stakes in the country’s stock exchanges in 2006.

Multi Commodity Exchange of India and BSE are both now publicly listed. 

For NSE, however, the IPO was not about raising money for the exchange itself. NSE shares were already available in the unlisted market and the IPO consisted entirely of shares being sold by existing investors, including State Bank of India, General Insurance of India and Canada Pension Plan Investment Board.

That means NSE will not receive any of the proceeds. Instead, the listing will give its large shareholder base access to a more liquid and transparent market in which to trade their shares.

But, becoming publicly traded will give NSE the option of raising capital in the future. The company is expected to invest more in technology to offer new products and expand in areas such as commodities trading.

Why is there buzz around the NSE listing?

Investors see NSE as a way to bet on the continued growth of India’s capital markets.

Retail investor participation in India’s stock market surged after the pandemic, and the rise of discount brokerages and smartphone trading apps has made it easier for millions of first-time investors to buy and sell stocks and derivatives.

There are now almost 250 million trading accounts in the country, almost three times the number five years ago – but still equivalent to less than a fifth of the country’s population.

As more household savings flow into financial assets and trading volumes grow, NSE stands to benefit by collecting fees on those transactions. 

But that growth story also creates a key risk for shareholders.

In 2024, India’s securities regulator took a series of steps to curb excessive speculation in equity derivatives, including tighter rules around minimum contract sizes, while the government raised taxes on derivative transactions earlier in 2026.    

Those measures have helped cool activity in a business that generates much of NSE’s revenue. Any sustained decline in trading volumes could reduce the transaction fees NSE collects, making regulation an important factor for investors assessing the exchange’s future growth.

Those concerns formed part of the backdrop to NSE’s IPO. The exchange downsized the share offering by about 15 per cent from what it had originally planned.

And while the IPO valued NSE at about US$46 billion, that is well below the peak of about US$57 billion that its unlisted shares commanded on privately traded platforms about a year ago, according to UnlistedZone.com. 

What next for NSE?

Once the exchange lists on BSE on Thursday, attention will turn to how NSE’s shares perform after years of pent-up demand.

The broader backdrop is mixed. Indian equities are having an unusually weak year, with the benchmark index down by about 10 per cent.

But demand for large IPOs remains solid: of the nine offerings that raised at least US$500 million over the past year, all but one have gained since their debuts, with those eight rising by more than 50 per cent on average.  

Another key question will be whether NSE can secure regulatory approval for its shares to eventually trade on its own exchange.

If successful, that could pave the way for NSE’s inclusion in its own benchmark indices, potentially generating additional demand from funds that track them. BLOOMBERG