NSE begins electronic settling of its unlisted shares: Details here

The National Stock Exchange of India (NSE) has started settling trades of its unlisted shares electronically from Monday. Central Depository Services India Ltd (CDSL) will facilitate these transactions, replacing the manual procedure, NSE said in an announcement on Friday.

Despite this regulatory shift, NSE clarified that its shares will remain unlisted, meaning they will not be publicly traded on any stock exchange. However, the move ensures that off-market transfers comply with the Securities and Exchange Board of India’s (Sebi) Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (SECC Regulations).

What are unlisted shares?

Unlisted shares are privately held shares of a company that do not have a market price on any public stock exchange. These include shares of startups or early-stage firms, companies such as NSE that are large but not listed, and companies that have been delisted.

What are the benefits of electronic transfer?

The decision aims to significantly shorten trade settlement times, reducing them from months to days. Previously, transactions required approval from both NSE and Sebi, delaying settlements by up to four to five months.

The revised process is expected to boost trading activity in the grey market, where NSE’s unlisted shares have seen heightened demand—especially after BSE Ltd witnessed a nearly 5,000 per cent rise over the past five years, according to Bloomberg.

How can shareholders transfer NSE shares?

Shareholders can now transfer their unlisted NSE shares using a delivery instruction slip (DIS) through CDSL. The activation of NSE’s international securities identification number (ISIN) from March 24 enables electronic transfers, removing the need for manual submission of transfer applications in two stages.

The earlier Stage I and Stage II share transfer application process has been discontinued, NSE confirmed.

Why now?

The move follows a directive from the market regulator last year, which pushed for a more structured framework for unlisted share transactions. While NSE has been exploring an IPO since first filing in 2016, regulatory hurdles have delayed its listing.

However, Sebi recently cleared the exchange of any wrongdoing in a long-standing case related to unfair market access, removing a major obstacle to NSE’s potential listing.

https://www.business-standard.com/companies/news/nse-electronic-settlement-unlisted-shares-cdsl-sebi-compliance-125032400315_1.html