Moneylife: Pune: Wednesday, 8th July 2026.
Sixteen years. That is how
long the National Stock Exchange (NSE) has fought to avoid being held directly
accountable under the Right to Information (RTI) Act. Last week, the Delhi High
Court finally dealt a decisive blow to that resistance, dismissing the
Exchange's appeal and affirming that the NSE is, indeed, a ‘public authority’
under the RTI Act. The judgement is about far more than one exchange or one
law. It raises fundamental questions about transparency, regulatory
accountability and the governance of India's most important market institution.
On 1st July, a division bench of the Delhi High Court upheld an April 2010 judgement by a single judge declaring that the NSE is a ‘public authority’ within the meaning of the RTI Act. That judge was justice Sanjiv Khanna, who went on to become the chief justice of India in 2025, but NSE’s appeal dragged on until last week. The legal battle may still not be over. The NSE can still appeal the Delhi High Court judgement before the Supreme Court. (RTI Act applies To National Stock Exchange: Delhi High Court)
Meanwhile, the RTI Act itself has been defanged and eviscerated so much over the past decade that the Exchange may find it easier to accept the judgement and stonewall queries as many government departments have begun to do. Whether NSE chooses to do so may, ultimately, depend as much on the Securities and Exchange Board of India (SEBI) as on the Exchange itself.
The battle to bring exchanges under RTI began with a citizen approaching the central information commission (CIC), asking it to declare the Exchange a ‘public authority’. A full bench of the CIC agreed; NSE promptly challenged the decision before the Delhi High Court. Justice Khanna delivered a comprehensive ruling in 2010 backing the CIC stand. He noted that the NSE performs essential public functions and can only operate through recognition granted under the Securities Contracts (Regulation) Act, 1956 (SCRA). Further, the SCRA and the SEBI Act have extensive regulatory powers, including approval of rules/bye-laws, board nominations, oversight of operations, power to supersede governing bodies, etc. This amounts to ‘deep and pervasive control’ by the government, not mere regulation. NSE contested the ruling and ensured that it benefited enormously from legal delays.
Ironically, the 16-year delay has only strengthened the case for greater public scrutiny of the Exchange. The NSE is far more than a profit-making company. It is a near-monopoly market infrastructure institution (MII) that functions as a de facto public utility, handling trillions of rupees of daily transactions while, simultaneously, regulating thousands of systemically important market participants.
For over two decades, the NSE cultivated an image of exemplary governance. That illusion collapsed after Moneylife published a whistle-blower's letter in 2015 exposing the co-location (Colo) scandal (Blowing the Whistle on Manipulation in NSE). The letter described how select brokers obtained an unfair trading advantage by accessing backup servers with lower latency. This arrangement discriminated against other Colo traders as well as ordinary investors and appeared to enjoy official protection within the Exchange, which refused to act on specific complaints.
The investigation that followed exposed serious governance failures, capricious appointments and the fact that its then managing director (MD) was making decisions on the guidance of a ‘Himalayan Guru’ with an email ID, with whom she shared confidential financial projections, board agendas and human resource allocations. These leaks as well as the highly irregular appointment and salary of the group operating officer went unquestioned by the board and the regulator right until the colocation investigation.
Had the NSE been subject to the RTI Act, it might have found it far harder to use its market dominance, immense profitability and advertising clout to discourage scrutiny, capture its regulator and silence critical questions from the media. Even today, NSE has 90% share of the cash equity market and around 80% of the derivatives market. Its market dominance gives it enormous pricing power and fee income, allowing it to run a highly profitable operation. Earlier this month, a division bench of justices C Hari Shankar and Om Prakash Shukla upheld the 2010 ruling and reiterated that the NSE qualifies as a public authority under the RTI Act.
The IPO Paradox
It may be argued that NSE’s long-awaited initial public offering (IPO) will compel mandatory disclosures under the listing agreement leading to greater transparency. Paradoxically, it will also alter management incentives and subject an already very profitable exchange to the relentless pressure of having to deliver revenue and profit growth every quarter.
When a public utility faces intense pressure to optimise revenues and margins to maximise short-term shareholder value, the temptation to cut corners, encourage frothy trading volumes and skirt its compliance and supervisory obligations as a first-level regulator is even greater. Remember, NSE’s reluctance and failure to regulate broker-members who whipped up large trading volumes by misusing client funds has already led to as many as 32 broker defaults and expulsions between May 2019 and early-2022. Investors losses due to these defaults were in thousands of crore rupees.The tension between profit maximisation and public obligations of exchanges is a globally recognised concern. This makes it even more important that the RTI Act applies to the Exchange's regulatory functions.
Earlier this month, the NSE filed a formal Draft Red Herring Prospectus (DRHP) for listing of its shares on the Bombay Stock Exchange (BSE). This happened after it negotiated with SEBI to settle or abandon investigations triggered by the Colo scam. The NSE agreed to a ₹1,491.21–crore settlement for the Colo and dark fibre cases, in addition to previous payments of ₹643.05 crore (TAP architecture case) and ₹72.65 crore for a massive technical glitch leading to trading stoppage in 2021. (Read: NSE Discloses ₹1,491 Crore Settlement Bid, Sweeping Legal Overhang Ahead of IPO)
Given NSE’s market dominance, SEBI can easily settle the RTI issue with a binding administrative directive to all exchanges to comply with the Act, appoint public information officers (PIOs) and put in place systems for receiving and answering public queries. The long legal standoff has comprehensively dismantled arguments against the RTI Act, based on commercial confidentiality or the sufficiency of SEBI's oversight. Not only does SEBI have the legal authority to do so, but its official stance before the CIC had strongly supported RTI compliance in 2010. That it stood by silently and allowed NSE to challenge the CIC order in court is an example of regulator capture.
What remains on trial is SEBI’s ability to exert itself in favour of transparency and accountability. Writing in Moneylife in 2010, the late Prakash Kardaley, an RTI activist, asked: “What is wrong in being transparent, unless one desperately wants to cover up one’s own misdeeds? Transparency in public life, either as the spirit or as a piece of legislation, when codified into a law, knows its legitimate Laxman Rekha. It does not cause any unwarranted invasion of an individual’s privacy. It does not expect disclosure of any information that would be detrimental to society at large. On the other hand, it attacks excessive and unnecessary secrecy that, in fact, is injurious to the well-being of society. Any opposition to the spirit of transparency, therefore, must be seen as profound disrespect to society.” Subsequent events at the NSE only revealed how prescient this was.
The Delhi High Court has removed another legal challenge to bringing the NSE within the RTI framework. SEBI no longer has any credible reason to remain passive. By issuing clear directions requiring every recognised exchange to appoint PIOs and comply with the Act, it can end years of needless litigation and, finally, align India's largest market institution with the transparency standards it expects of everyone else.
On 1st July, a division bench of the Delhi High Court upheld an April 2010 judgement by a single judge declaring that the NSE is a ‘public authority’ within the meaning of the RTI Act. That judge was justice Sanjiv Khanna, who went on to become the chief justice of India in 2025, but NSE’s appeal dragged on until last week. The legal battle may still not be over. The NSE can still appeal the Delhi High Court judgement before the Supreme Court. (RTI Act applies To National Stock Exchange: Delhi High Court)
Meanwhile, the RTI Act itself has been defanged and eviscerated so much over the past decade that the Exchange may find it easier to accept the judgement and stonewall queries as many government departments have begun to do. Whether NSE chooses to do so may, ultimately, depend as much on the Securities and Exchange Board of India (SEBI) as on the Exchange itself.
The battle to bring exchanges under RTI began with a citizen approaching the central information commission (CIC), asking it to declare the Exchange a ‘public authority’. A full bench of the CIC agreed; NSE promptly challenged the decision before the Delhi High Court. Justice Khanna delivered a comprehensive ruling in 2010 backing the CIC stand. He noted that the NSE performs essential public functions and can only operate through recognition granted under the Securities Contracts (Regulation) Act, 1956 (SCRA). Further, the SCRA and the SEBI Act have extensive regulatory powers, including approval of rules/bye-laws, board nominations, oversight of operations, power to supersede governing bodies, etc. This amounts to ‘deep and pervasive control’ by the government, not mere regulation. NSE contested the ruling and ensured that it benefited enormously from legal delays.
Ironically, the 16-year delay has only strengthened the case for greater public scrutiny of the Exchange. The NSE is far more than a profit-making company. It is a near-monopoly market infrastructure institution (MII) that functions as a de facto public utility, handling trillions of rupees of daily transactions while, simultaneously, regulating thousands of systemically important market participants.
For over two decades, the NSE cultivated an image of exemplary governance. That illusion collapsed after Moneylife published a whistle-blower's letter in 2015 exposing the co-location (Colo) scandal (Blowing the Whistle on Manipulation in NSE). The letter described how select brokers obtained an unfair trading advantage by accessing backup servers with lower latency. This arrangement discriminated against other Colo traders as well as ordinary investors and appeared to enjoy official protection within the Exchange, which refused to act on specific complaints.
The investigation that followed exposed serious governance failures, capricious appointments and the fact that its then managing director (MD) was making decisions on the guidance of a ‘Himalayan Guru’ with an email ID, with whom she shared confidential financial projections, board agendas and human resource allocations. These leaks as well as the highly irregular appointment and salary of the group operating officer went unquestioned by the board and the regulator right until the colocation investigation.
Had the NSE been subject to the RTI Act, it might have found it far harder to use its market dominance, immense profitability and advertising clout to discourage scrutiny, capture its regulator and silence critical questions from the media. Even today, NSE has 90% share of the cash equity market and around 80% of the derivatives market. Its market dominance gives it enormous pricing power and fee income, allowing it to run a highly profitable operation. Earlier this month, a division bench of justices C Hari Shankar and Om Prakash Shukla upheld the 2010 ruling and reiterated that the NSE qualifies as a public authority under the RTI Act.
The IPO Paradox
It may be argued that NSE’s long-awaited initial public offering (IPO) will compel mandatory disclosures under the listing agreement leading to greater transparency. Paradoxically, it will also alter management incentives and subject an already very profitable exchange to the relentless pressure of having to deliver revenue and profit growth every quarter.
When a public utility faces intense pressure to optimise revenues and margins to maximise short-term shareholder value, the temptation to cut corners, encourage frothy trading volumes and skirt its compliance and supervisory obligations as a first-level regulator is even greater. Remember, NSE’s reluctance and failure to regulate broker-members who whipped up large trading volumes by misusing client funds has already led to as many as 32 broker defaults and expulsions between May 2019 and early-2022. Investors losses due to these defaults were in thousands of crore rupees.The tension between profit maximisation and public obligations of exchanges is a globally recognised concern. This makes it even more important that the RTI Act applies to the Exchange's regulatory functions.
Earlier this month, the NSE filed a formal Draft Red Herring Prospectus (DRHP) for listing of its shares on the Bombay Stock Exchange (BSE). This happened after it negotiated with SEBI to settle or abandon investigations triggered by the Colo scam. The NSE agreed to a ₹1,491.21–crore settlement for the Colo and dark fibre cases, in addition to previous payments of ₹643.05 crore (TAP architecture case) and ₹72.65 crore for a massive technical glitch leading to trading stoppage in 2021. (Read: NSE Discloses ₹1,491 Crore Settlement Bid, Sweeping Legal Overhang Ahead of IPO)
Given NSE’s market dominance, SEBI can easily settle the RTI issue with a binding administrative directive to all exchanges to comply with the Act, appoint public information officers (PIOs) and put in place systems for receiving and answering public queries. The long legal standoff has comprehensively dismantled arguments against the RTI Act, based on commercial confidentiality or the sufficiency of SEBI's oversight. Not only does SEBI have the legal authority to do so, but its official stance before the CIC had strongly supported RTI compliance in 2010. That it stood by silently and allowed NSE to challenge the CIC order in court is an example of regulator capture.
What remains on trial is SEBI’s ability to exert itself in favour of transparency and accountability. Writing in Moneylife in 2010, the late Prakash Kardaley, an RTI activist, asked: “What is wrong in being transparent, unless one desperately wants to cover up one’s own misdeeds? Transparency in public life, either as the spirit or as a piece of legislation, when codified into a law, knows its legitimate Laxman Rekha. It does not cause any unwarranted invasion of an individual’s privacy. It does not expect disclosure of any information that would be detrimental to society at large. On the other hand, it attacks excessive and unnecessary secrecy that, in fact, is injurious to the well-being of society. Any opposition to the spirit of transparency, therefore, must be seen as profound disrespect to society.” Subsequent events at the NSE only revealed how prescient this was.
The Delhi High Court has removed another legal challenge to bringing the NSE within the RTI framework. SEBI no longer has any credible reason to remain passive. By issuing clear directions requiring every recognised exchange to appoint PIOs and comply with the Act, it can end years of needless litigation and, finally, align India's largest market institution with the transparency standards it expects of everyone else.
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