SEBI proposes raising investment cap in bourses to 15 per cent

05 September 2008

Mumbai: The Securities Exchange Board of India (SEBI) has proposed raising the individual investment limit in stock exchanges to 15 per cent from the current 5 per cent for select institutional investors.

This will, however, be limited to stock exchanges, depositories, clearing corporations, banks and insurance companies only, market regulator SEBI said in a discussion paper.

The SEBI move could lead to foreign stock exchanges increasing their existing stakes in Indian bourses.

The National Stock Exchange (NSE), the country's largest stock exchange by traded volume, has sold stakes to NYSE Euronext and Goldman Sachs while rival Bombay Stock Exchange (BSE) has sold stakes to the Singapore Stock Exchange and Deutsche Boerse.

''SEBI has been receiving requests from certain quarters that the present limit of 5 per cent is acting as a deterrent for attracting long-term anchor/strategic investors in stock exchanges," the SEBI discussion paper pointed out.

Current regulations restrict foreign direct shareholding in recognised Indian stock exchanges by any person to not more than 5 per cent in the paid-up equity capital of a recognised stock exchange.