After about 10 years of a volatile journey towards it, the National Stock Exchange (NSE) is now a listed company. The associated developments have made headlines for long. However, unlike in the past, self-listing has not figured in recent discourses, as if the issue has been closed forever. After the implementation of the three-pillar model, based on the recommendations of the Mahalingam Committee, the governance structure of exchanges and other market infrastructure institutions (MIIs) has changed substantively.
The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, have been revamped and amended several times since 2012, most recently on November 22, 2025. However, Chapter VII of the regulations relating to listing remains in the 2012 vintage. Those provisions read as follows:
45. (1) Subject to the provisions of the applicable laws in force, a recognised stock exchange may apply for listing of its securities on any recognised stock exchange, other than itself and its associated stock exchange, if,— (a) it is compliant with the provisions of these regulations particularly those relating to ownership and governance; (b) it has completed three years of continuous trading operations immediately preceding the date of application of listing; and (c) it has obtained approval of the Board:
Provided the Board may specify such conditions as it may deem fit in the interest of the securities market including those in relation to transfer of shares held by any person.
(2) A recognised stock exchange shall not list any securities of its associates.
It is clear that the regulations do not allow self-listing of an exchange and listing of any of its associates on its platform. Further, it places a number of conditions on listing an exchange, even when it goes for cross-listing, three of which are explicitly stated in the regulations. Sebi can impose other additional conditions in the interest of the securities markets.
Interestingly, it was a commodity exchange, Multi-Commodity Exchange of India (MCX) that first went public, much before the stock exchanges, in India in March 2012. The issue of self-listing was not applicable here, since a commodity exchange cannot list any company on its platform. MCX listed its shares on BSE Ltd. NSE “adopted” its securities for trading on its main platform under the “permitted to trade category”. BSE Limited listed in February 2017. It had to cross-list, on the NSE. Similarly, following the regulations that associates also cannot be listed on related exchanges, the Central Depository Services (India) Ltd, a BSE associate, was listed on the NSE in June 2017. The National Securities Depositories Ltd, an NSE associate, was listed on BSE in August 2025.
Should listing be that rigid? An exchange is arguably the most regulated legal entity under any law in India. Listing is considered a transparency enhancing, positive mechanism. Even the RBI has stipulated that the top-layer NBFCs have to be listed on this ground. The stipulation is being hotly debated in respect of Tata Sons, brewing a perfect storm on corporate governance.
Market regulators are not comfortable with self-listing because stock exchanges hold a dual identity as for-profit commercial entities and front-line market regulators. This, for regulators, creates a paradox where a self-listed exchange has to regulate itself, resulting in potential conflict of interest. While cross-listing is the preferred alternative, it introduces other issues like submitting proprietary corporate and operational data to a direct rival, giving competitors deep insight and advantages.
Despite concerns on self-listing, many major global stock exchanges operate as publicly traded corporations, frequently listing their shares directly on their own platforms or through parent group structures. For instance, Nasdaq Inc and Singapore Exchange Limited are both listed exclusively on their own respective platforms.
The Hong Kong Exchanges and Clearing is traded directly on its main board. Other prominent marketplaces are operated by listed parent firms, such as the London Stock Exchange Group (LSEG) trading on the LSE, the Japan Exchange Group overseeing the Tokyo Stock Exchange, and the Australian Securities Exchange and TMX Group (owner of the Toronto Stock Exchange) managing their national markets.
In order to enhance governance standards of stock exchanges (and other MIIs), Sebi amended the regulations in March 2023, following the recommendations of the Mahalingam Committee Report in November 2022. This mandated a three-pillar/vertical model for MIIs. The regulations in respect of exchanges and clearing corporations are as follows (in parallel, amendments to the depositories regulations were issued under the Depositories Act).
28. (1) Every recognised stock exchange and recognised clearing corporation shall identify its functions and segregate them into the following verticals:
(a) Critical operations; (b) regulatory, compliance, risk management, and investor grievances; and (c) other functions including business development.
Under this model, two verticals — on critical operations and regulatory, compliance, risk management and investor grievances — are to be headed by an executive director each who would report to the board of directors of the company as well as to Sebi. All the exchanges and other MIIs have implemented this model by mid-2026. Given this rather rigid functional separation and associated mandate and accountability of officials, governance framework of an exchange is much more robust and systemised now.
Even otherwise, exchanges are the most closely regulated entities. A regulatory action on it violating the Listing Obligations and Disclosure Regulations (LODR) would be the death knell for an exchange. Fearing a delisting order from Sebi could be perhaps the best weapon for behaviour modification on exchange governance. Exchanges that regulate 2,500/5,000 listed entities under their wings can’t afford to make any LODR violations themselves.
A hybrid, self-plus-cross-listing framework offers critical, strategic advantages to the exchanges. It optimises market microstructure by expanding the liquidity pool, allowing the entity to leverage its active domestic retail trading base to attract institutional order flow from international or competing bourses. It mitigates systemic competitive disadvantages regarding fee and data asymmetry, which encouraged regulators in many other jurisdictions to allow self-listing.
A hyper-cautious approach by Sebi on listing of exchanges reflects a trust deficit, that too when exchanges are given powers to regulate thousands of entities. It also reflects low self-confidence of the regulator, despite its overwhelming powers over exchanges. It is an irony. It is time to revisit the issue and allow self-listing, along with cross-listing as a hedge as it exists now.