SEBI proposes raising investment cap in bourses

MUMBAI (Reuters) - India's financial market regulator on Friday proposed raising the investment limit in stock exchanges to 15 percent from 5 percent for certain investors, which could lead to foreign exchanges increasing existing stakes.

Stock exchanges, depositories, clearing corporations, banks and insurance companies may be permitted to own up to 15 percent of an Indian exchange, the Securities and Exchange Board of India said in a discussion paper.

"SEBI has also been receiving requests from certain quarters that the present limit of 5 percent is acting as a deterrent for attracting long-term anchor/strategic investors in stock exchanges," the regulator said in its discussion paper

The National Stock Exchange (NSE), India's largest bourse by traded volumes, sold stakes to NYSE Euronext and Goldman Sachs among others in 2007.

The rival Bombay Stock Exchange (BSE), home of country's benchmark share index, the 30-share Sensex, has sold stakes to the Singapore Stock Exchange and Deutsche Boerse.

Foreign ownership in Indian exchanges is restricted to 49 percent, with foreign institutional investment capped at 23 percent and foreign direct investment capped at 26 percent.

There are 18 recognised stock exchanges in India that have been corporatised, with 51 percent of their shares held by the public other than trading members, SEBI said. Trade is dominated by the Mumbai-based NSE and BSE.

SEBI said feedback on its proposals had to be submitted by Sept. 19.