NSE IPO: How India's biggest stock exchange makes money beyond trading fees

Unlike banks or manufacturing companies, the National Stock Exchange (NSE) is a platform business. It does not lend money or manufacture products. Instead, it matches buyers and sellers and earns a fee every time a trade is executed. As more Indians participate in the stock market, NSE's earnings have the potential to grow.

Transaction charges contribute around 79% of NSE's operating revenue (FY 2025-26). The exchange earns fees on trades in equities, futures, options and other derivatives. According to the IPO prospectus, options account for 76.6% of transaction charge revenue, futures 11.3%, and cash equities 11.9%.

What you should know: NSE's earnings are highly dependent on derivatives trading, especially options. Any regulatory tightening in the F&O segment could significantly affect profitability.

NSE also earns by providing market data feeds and trading infrastructure to brokers, institutions and traders. This segment contributes around 10% of operating revenue (FY 2025-26) and is relatively less volatile than transaction-based income.

What you should know: This business provides recurring revenue and acts as a stability buffer.

Apart from its core business, NSE also invests its surplus funds. This treasury and investment income contributes around 15% of total income (FY 2025-26).

What you should know: Treasury income provides downside protection during weak market cycles and improves the overall stability of NSE's earnings.

Every time a company lists on the NSE, the exchange earns a one-time listing fee. In addition, all listed companies pay an annual listing fee, which is based on slabs linked to their paid-up capital. Even if IPO activity slows, NSE continues to earn recurring revenue from its large base of listed companies.

Listing fees contribute around 2% of NSE's operating revenue. Although relatively small compared to transaction charges, they provide a steady source of recurring income from companies already listed on the exchange.

Sweta Padhi, Lead Research Analyst, IDBI Capital, says NSE's long-term growth is supported by India's increasing financialisation of savings. Given its leadership across key market segments and broad product offerings, she believes NSE is a high-quality business that deserves a place in long-term investment portfolios.

Another analyst adds that the IPO is better suited for investors looking to participate in India's long-term financialisation story rather than those seeking short-term listing gains.