New Delhi

TheNational Stock Exchange (NSE) may allow its shares to trade on its platform after being listed on a rival bourse, without requiring a separate approval from Sebi, as the proposed arrangement would fall under the exchange’s existing ‘permitted-to-trade’ framework, an industry source said on Thursday.

The distinction is important as permitted-to-trade is not the same as listing. While a listed company has disclosure and compliance obligations towards the primary exchange where it is listed, the ‘permitted-to-trade’ framework only helps investors to buy and sell the security on another bourse.

Under the permitted-to-trade framework, an exchange can allow trading in shares that are listed on another recognised stock exchange. The company does not become listed on the exchange where its shares are permitted to trade. “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 trade on its platform but are not listed on its platform, suggesting that trading on an exchange does not necessarily mean that the security is listed there.

The same mechanism is being used by other exchanges. MSEI and NCDEX together have around 4,000 companies whose securities are permitted to trade on their platforms even though they are not listed on those exchanges. Such permitted-to-trade arrangements do not involve a separate approval from Sebi for each security, as the process concerns trading of securities and does not amount to a fresh listing. The move could become significant for NSE as it prepares for its own public-market debut.