NSE shares may trade on its platform under 'permitted-to-trade' route

NSE could soon have its own shares trading on its platform, even as they are already listed on another stock exchange first. The exchange may not need a separate Sebi approval to do this, as the move could come under its existing ‘permitted-to-trade’ system, an industry source cited by news agency PTI said on Thursday.

The system allows an exchange to let investors trade shares that are listed on another recognised exchange. But trading on an exchange does not mean the company is listed there. This difference is important. A company has to meet disclosure and compliance rules of the exchange where it is listed. Under the ‘permitted-to-trade’ system, the other exchange simply allows investors to buy and sell the shares.

"NSE may not be required to take Sebi approval for allowing its own shares to trade on the platform as far as it lists its shares on another exchange," the source familiar with the development said.

NSE already has more than 200 companies whose shares can be traded on its platform even though they are not listed there. So, being available for trading on NSE does not necessarily mean that a company is listed on NSE. Other exchanges use the same system. MSEI and NCDEX together have around 4,000 companies whose securities are allowed to trade on their platforms despite not being listed on those exchanges. The system does not require separate Sebi approval for each security because it allows trading in shares without creating a new listing.

The arrangement could become important as NSE prepares for its own public-market debut. If NSE lists its shares on another exchange, it could later allow those shares to trade on NSE under the existing system. For investors, this could mean NSE shares become available for trading on NSE itself, while remaining officially listed on another exchange.