Mumbai, June 19 -- The National Stock Exchange (NSE) has waited nearly a decade to go public. However, just as investors finally get the chance to own India's largest market infrastructure company, its FY26 earnings present a sobering reality. Following the Securities and Exchange Board of India's crackdown on speculative trading, NSE's high margins may shrink back to historical averages, some experts said. Investors face a critical question: should FY26 be dismissed as an aberration, or accepted as the exchange's new normal? Operating margin plunged to 67% in FY26 from about 74% a year ago, suggesting profitability in core operations has weakened. Net profit consequently fell 16% year-on-year to Rs.10,302 crore in FY26 from Rs.12,188 crore the year before. Profit was heavily influenced by contrasting one-off events. A net exceptional gain of Rs.1,075 crore, largely driven by selling a 9% stake in NSDL helped cushion the drop in reported earnings. Meanwhile, settlement charges paid to the Sebi more than doubled. Even without these one-off expenses, NSE's underlying profitability failed to match the previous year's performance. Adjusted operating margin dipped to 76% in FY26 from 78% a year earlier. This indicates that while regulatory costs skewed the headline numbers, a broader slowdown in core operations was already weighing on profitability. In late 2024, Sebi moved to curb speculative retail trading in equity derivatives, impacting trading volumes in FY26. The pressure was first felt in trading services, NSE's largest business, in which transaction charges make up the bulk of revenue. Average daily trading volumes moderated across the cash, futures and options segments, pulling transaction-charge income down 4% year-on-year to Rs.13,057 crore in FY26 from Rs.13,636 crore a year earlier. Since transaction charges account for nearly 80% of NSE's operating revenue, overall operating revenue fell 3% to Rs.16,601 crore. The clearing business, in which fortunes are closely tied to trading activity, recorded a sharper 30% drop in revenue to Rs.1,762 crore. Meanwhile, rising technology and employee costs left NSE with little room to absorb weaker trading income, causing operating profit to fall nearly 14%. Trading profit declined 9%, while clearing profit plunged 43%. Employee expenses rose nearly 20% to Rs.790 crore in FY26, and NSE also booked a one-time Rs.126-crore charge for implementing the new labour codes. Technology spending rose almost 30% to Rs.1,315 crore as the exchange invested in trading infrastructure and cyber resilience, while depreciation rose 14% to Rs.624 crore. The result: A reversal of NSE's well-known operating leverage, with margins coming under pressure as costs outpaced revenues. As regulatory expectations tighten, technology and compliance spending become unavoidable, said Prasenjit Paul, research analyst at Paul Asset. While margins may not return to the peaks of the derivatives boom, he expects operating leverage to improve as trading activity recovers. Karthick Jonagadla, CEO, Quantace Research, expects NSE's margins to settle in the mid-70% range over FY25-28. He said the derivatives reforms have fundamentally reset short-duration speculative activity, making a return to 80%-plus margins unlikely....