Sources: India's stock market prepares to file for its own listing

The National Stock Exchange of India Ltd. (NSE), India's largest stock exchange, plans to file a draft prospectus for its long-awaited listing by the end of March, sources told Reuters.

The exchange's officials are in talks with investment bankers and law firms to finalize the prospectus and gauge investor interest in what could be one of the largest initial public offerings in India's history, the sources said.

The NSE did not say how much of its shares would be listed. A platform that trades NSE's unlisted shares estimates the exchange's total value at $55 billion.

The formal appointments of bankers and lawyers will follow the approval of market regulator the Securities and Exchange Board of India (SEBI), one of the sources said, confirming that initial discussions for the IPO have begun.

NSE did not respond to Reuters requests for comment last week.

SEBI chairman said recently that the regulator could grant the necessary approval for NSE's listing this month.

• Listing delayed since 2016

India's largest stock exchange and the world's most active derivatives exchange has been trying to list since 2016. The approval has been delayed by regulatory investigations into its conduct in providing fair market access to traders through its co-location facilities. The case is currently pending in India's Supreme Court.

NSE last year offered to settle the matter by paying 13.87 billion rupees ($154 million), and the regulator is still considering a possible settlement, Reuters reported.

Before the public offering, NSE's unlisted shares were trading at more than 2,000 Indian rupees ($22.16), according to Unlisted Arena, an Indian platform that facilitates the buying and selling of unlisted shares, valuing the exchange at 5 trillion rupees, or $55 billion.

Its smaller rival, BSE Ltd., is trading at 2,767 rupees per share.

Before the listing, NSE has 177,807 shareholders, making it India's largest unlisted company by number of investors. Lawyers handling the IPO documents are working on mechanisms to ensure fair exit opportunities for this large investor base, one of the sources said. Preference for exits is likely to be given to foreign banks and institutions that have held NSE shares for a long time, the source added.

Major institutional shareholders of NSE include Life Insurance Corp. of India, State Bank of India, Temasek Holdings, Morgan Stanley and Canada Pension Plan Investment Board.