Markets regulator Securities and Exchange Board of India (SEBI) has, in-principle, agreed to the settlement applications filed by the National Stock Exchange (NSE) in co-location and dark fibre matters, Chairman Tuhin Kanta Pandey said on Thursday. The move is likely to speed up NSE’s initial public offering (IPO) application, which has been awaiting SEBI’s approval for a long time.
“This (settlement application) is under process with different committees at SEBI, but in principle we agree to that settlement,” Pandey told reporters on the sidelines of an event organized by the Association of Investment Bankers of India (AIBI).
A co-location facility is the data centre facility offered by exchanges to the stock brokers. A dark fibre refers to passive optical cables that are not connected to active electronics/equipment and do not have other data flowing through them, and can therefore be used to convey data between two points.
In June last year, the NSE had said that it had filed two separate settlement applications for a cumulative amount of Rs 1,387.39 crore with the markets regulator for the settlement of co-location and dark fibre cases. During the quarter ended September 30, 2025, it had set aside Rs 1,297.41 crore in provisions related to these two matters.
NSE faced allegations that some brokers got preferential access through the co-location facility at the stock exchange, early login and ‘dark fiber’ — which can allow a trader a split-second faster access to data feed of an exchange. The allegations of unfair market access were first raised by a whistle-blower in January 2015.
Pandey’s statement comes days after he hinted that SEBI may issue a no-objection certificate to the NSE for its IPO this month. The NSE had filed its draft red herring prospectus in 2016.
The Chairman said SEBI is in talks with the Ministry of Corporate Affairs to explore ways to regulate the unlisted share market, which currently falls outside the regulatory ambit.
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“We have to see whether we do have regulatory powers to get into an unlisted area and how far that unlisted area goes. This is under discussion with the Ministry of Corporate Affairs,” Pandey said when asked if SEBI was looking at ways to regulate trading in unlisted shares.
Unlisted shares are company shares not listed on any stock exchanges. These kinds of shares are traded over-the-counter within a small group of investors. Trading in unlisted shares of a company typically begins at least two to three years before it files for an IPO. Pandey said that the unlisted share market is a grey area with no oversight, and the regulator’s role begins only when a company is planning to list or is about to get listed.
Earlier in his speech, the Chairman had raised concern over recurring disclosure gaps in the IPO offer documents. These gaps, he said, reduce transparency and investor understanding, while extending fund-raising timeline through repeated regulatory queries.
“Disclosures on capital structure must clearly explain past capital raisings, preferential allotments, and changes in control — especially close to the IPO. We also expect greater business model clarity, with transparent revenue and cost drivers,” he said.
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