NSE Shares Turn Easier to Trade Ahead of IPO

In a significant step towards the potential listing of India's largest bourse, the National Stock Exchange of India Ltd will lift a key hurdle that stood in the way of faster transfers of its shares.

- Ram Sahgal

NSE has informed its shareholders that the current process for transferring its shares will be lifted on Monday, implying that NSE shares can be credited to a buyer's account more expeditiously than the current 2-4 months.

The stock exchange's move is in line with a 14 October circular by the Securities and Exchange Board of India specifying shareholding rules for market infrastructure institutions, including on share transfers and designating depositories for transfer of shareholding. This was supposed to be effective from January but its implementation was delayed.

The faster completion of such share transfers in a few days after a trade is executed, rather than in a few months, could increase the demand and activity in the unlisted segment for NSE's shares because of vastly reduced transaction costs.

The current months-long process for transferring NSE shares renders the stock relatively illiquid as compared with other unlisted entities, which don't have to adhere to such rules as they are not systemically important institutions.