Market regulator SEBI on Friday proposed raising the cap on shareholding in stock exchanges to 15 per cent from 5 per cent now, but sought to limit such a privilege to individual investors like bourses, depositories, banks, clearing corporations and insurance companies.

However, any other shareholder would continue to hold up to five per cent of the equity in a stock exchange, SEBI proposed in its discussion paper and invited comments from the public by September 19.

SEBI mooted the proposal after receiving submissions from existing shareholders of the National Stock Exchange and Over-the-Counter Exchange of India regarding difficulties faced by them in bringing down their equity to the present cap of five per cent.

Following demutualisation and corporatisation of stock exchanges, the government had proposed to allow foreign investment of up to 49 per cent in stock exchanges with a cap of 26 per cent for FDI and 23 per cent for FIIs. However, no individual entity, domestic or foreign, can hold more than five per cent at present.

Demutualisation refers to segregation of trading and ownership rights, by which equity of brokers have been brought down to 49 per cent in stock exchanges in India.