The capital market regulator, the Securities and Exchange Board of India, recently renewed the license of NSE clearing for the next three years. In the gazette notification, SEBI officially declared the license renewal that will be valid till October 2026. From the NSE perspective, getting a license renewal is a positive sign as it depicts that SEBI is satisfied with the functioning of the NSE Clearing Corporation Ltd. In this blog, we will discuss the license renewal and how it will affect NSE share price and performance in the future.
Key Highlights Of NSE Clearing’s License Renewal By SEBI
NSE, India’s prominent stock exchange of India, has a diversified business model in which it offers different services via its different subsidiaries. NSE Clearing is a wholly-owned subsidiary engaged in the clearing and settlement services. It was under the constant monitoring of the SEBI for transparent trade execution in NSE. An operating license of the NSE Clearing was about to end, for which the company had already applied for the license renewal process with a capital market regulator of India.
- In September 2023, SEBI shared the official statement regarding renewing the NSE clearing license for the next three years. As per the report of the Mint, the capital market regulator is satisfied in the interest of the trade. In the notification, SEBI said, “It has renewed NSE Clearing recognition to function as a clearing corporation for three years commencing on October 3, 2023 and ending on October 2, 2026.”
- With the license renewal, it is clear that NSE Clearing will have to comply with the conditions specified by SEBI from time to time. These conditions are essential for ensuring the smooth and secure functioning of the clearing corporations in the future.
How The License Renewal Will Benefit NSE?
The license renewal is important for NSE Clearing and its parent company, NSE. For any company, getting a license from SEBI for the operations is like a green light to continue the operations. Retail investors who trade in equities and derivatives will have assurance that NSE Clearing follows the compliance and regulations of the SEBI. Here are the following benefits NSE will get from this license renewal:
Participation Of Investors
The major benefit NSE will get from the license renewal of its wholly-owned subsidiary is the entry of new investors. Retail and institutional investors will use clearing and settlement services of the NSE clearing in large numbers, which will positively affect the NSE share price and performance in the unlisted share market. With this, NSE can legally execute new trade and settlement of the previous ones.
There is no doubt that millions of investors trust the NSE for trading and settlement services. However, having a license for the next three years will help the stock exchange and its clearing arm establish credibility among new and international investors. We may also see a huge demand for the NSE unlisted shares among retail investors. In addition, NSE Clearing operations and financials may also affect NSE stock price, which results in a higher value than the current one.
Demand For NSE Other Services
According to a report in the Economic Times, more than 75% of investors used NSE clearing for trade execution and settlement processes. Apart from clearing and settlement services, NSE also provides other services like IT research and development and indices, which are also the needs of the investors. With the license renewal, it will be easier for NSE to apply for its other subsidiaries’ license renewal process. As a result, the demand for the NSE’s other services will surge among investors.
NSE’s Predicted Future In The Unlisted Share Market
NSE is currently an unlisted company that is in the planning phase of its Initial Public Offering(IPO). From the business perspective, NSE showed positive growth in the last three years. As per the financial report shared by the company, NSE share price increased from INR 3,400 per equity share to INR 3,600 per equity in the last two months.
Apart from this, NSE recorded a growth in its operating revenue and Profit After Tax, which is a positive sign for investors. As the number of investors continues to rise in the future, NSE will expect to perform better and capture the majority of market share via its different subsidiaries.
It might be a profitable investment for investors who are seeking to diversify their investment portfolio. NSE unlisted shares are available for trading in the unlisted share market. You can easily buy NSE pre-IPO shares by using trading platforms like Stockify.
The major benefit for using such a platform is that you can check NSE share price and other financial metrics hassle-free. In addition, you also get assistance from industry experts regarding investment in unlisted shares. Ready to explore NSE pre-IPO shares? Visit Stockify now!