The country’s largest stock exchange National Stock Exchange (NSE) has warned that regulatory changes, technology failures, cyber attacks and AI-related risks, as well as its heavy dependence on income from futures-options trading, could have a significant impact on its financial performance and business operations.
NSE It admitted that in recent years there have been website outages, errors in market data, log-in disruptions and errors in information related to futures options. Referring to the February 2021 incident, the exchange said that due to a technical glitch, the risk management, clearing, settlement and monitoring systems were affected and trading remained halted across all segments for more than five hours. In the context of cyber security, the National Stock Exchange (NSE) said that in May 2025, there was a huge DDoS (Distributed Denial of Service) attack on its website, in which about 39.5 crore (395 million) complaints were registered in just 11 minutes.
Contribution of options trading 60.22 percent
NSE said in documents related to its initial public offering (IPO) filed on Wednesday that 78.65 percent of its operating revenue in the financial year 2025-26 came from transaction fees, of which only options trading contributed 60.22 percent. It said recent regulatory measures taken by the Securities and Exchange Board of India (SEBI) to strengthen the equity futures-options framework have led to reduced trading activity in both cash and futures-options segments, leading to lower trading income in FY 2025-26.
NSE warned, be alert
NSE cautioned that further tightening of regulations, higher transaction taxes, change in investor preferences or trend towards alternative asset classes could impact your profits. It also mentioned the extensive regulatory risks and said that it remains constantly under the purview of SEBI’s monitoring, inspection and enforcement action. It has received show cause notices, warning letters and advisories on matters related to operations, governance, technology and compliance. NSE said it has had to incur large settlement expenses in recent years, including a payment of over Rs 643 crore in October 2024 in a matter related to trading access point (TAP) infrastructure and network connectivity. In July 2025 also, it paid Rs 40.35 crore under another settlement order. It said that several legal and regulatory proceedings are still pending, including matters related to co-location and dark fiber, which may have a material and reputational impact. Technology failures and cyber security incidents have been cited as major operational risks due to a fully electronic trading system.
Rapidly increasing use of AI
NSE identified AI and machine learning as emerging risk areas. It said the use of AI in surveillance, risk management and customer services is increasing, but it may lead to inaccurate conclusions due to inaccurate or biased data. This poses a risk of operational and financial losses or violation of regulations. It cautioned that the increasing use of AI-based and algorithmic trading strategies could increase market volatility and lead to sudden price fluctuations. Additionally, new methods of manipulation may also emerge, which will be difficult to identify. According to the IPO documents, AI-based cyber attacks, identity replication through deepfakes, data leaks from third-party AI tools and AI-based coding vulnerabilities may pose additional risks. NSE said that changes in rules related to AI may also increase compliance requirements such as new norms related to transparency, accountability and audit may be implemented.
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