NSE cuts IPO size as options trading cools under regulatory curbs

Due to weaker options trading and tighter regulations, several major shareholders of the National Stock Exchange are reducing the number of shares they intend to sell in the exchange’s upcoming initial public offering.

The IPO is now expected to take up around 5.2% of the NSE’s equity, compared with the earlier plan of 6%. Shareholders are expected to offload about 126 million shares, down from a previous plan to sell 149 million.

The NSE shares may be priced at Rs 1,700 to Rs 1,785 each with the issue valued at around Rs 226 billion ($2.37 billion) at the upper end. The NSE IPO will be an offer for sale by existing shareholders and will not raise fresh capital for the NSE.

The dimmer outlook comes as options trading volumes fall in response to tighter market rules, higher derivatives taxes and curbs on retail participation. Transaction charges on options constitute more than 60% of NSE’s revenue.

Reuters reported that in August, the exchange’s Options turnover fell more than 12% year over year.

“These shareholders believe they will get a better valuation in the secondary market post-listing,” said a source.