India may raise cap on single investors in bourses

MUMBAI, Aug 20 - India's capital markets regulator is examining a proposal to raise the limit for single investors in stock exchanges to 15 percent from 5 percent, the Economic Times said on Wednesday, citing an unnamed official.

"The decision to revisit the existing norms on investment in stock exchanges has been prompted by the fact that the current cap on equity holdings could act as a deterrent to potential promoters of new exchanges," it cited the official as saying.

The proposal was discussed at the regulator's last board meeting, and it was decided that a final view will be taken "after seeking wider comments", the official was cited as saying.

A spokesman for the Securities & Exchange Board of India said he could not immediately comment on the report.

The new cap would be applicable for local and foreign investors, the paper said, and would enable existing investors to raise their stakes further.

India now caps total foreign investment in stock exchanges at 49 percent. The Economic Times said within that limit, total foreign direct investment in exchanges be up to 26 percent and total foreign institutional investment could be up to 23 percent.

Deutsche Boerse and Singapore Exchange acquired 5 percent each in the Bombay Stock Exchange last year.

Goldman Sachs owns 5 percent in the National Stock Exchange, as does NYSE Euronext , which also has 5 percent in Multi Commodity Exchange, India's largest commodity bourse.

In commodity bourses, too, single holdings of foreign companies, funds and exchanges are capped at 5 percent. Citigroup and Merrill Lynch also have 5 percent each in MCX.

Interest in India's exchanges has been high, and had tracked a recent wave of consolidation attempts among bourses around the world as the volume of trade soared and operators sought global reach and greater economies of scale.