The current policy permits foreign bourses to own a maximum of 5 per cent stake in Indian exchanges.
"The current policy on ownership of stock exchanges may be amended to allow for an investment stake of at least 15 per cent (or preferably even 26-49 per cent) for foreign exchanges of international repute, in line with the regulations for Indian exchanges," BSE said.
The recommendation has been made by the BSE in a document to the Ministry of Finance ahead of the budget in July.
According to the leading stock exchange, while the current policy does not "preclude a strategic partnership between an Indian and a foreign exchange, the 5 per cent cap does make such a partnership difficult".
It added: "Without the potential for a meaningful investment stake of at least 15 per cent (or preferably even 26-49 per cent) potential foreign partners are reluctant to engage fully because there is inadequate 'skin in the game'."
BSE has said the move will allow domestic stock exchanges the flexibility to form deeper partnerships with global bourses, enhance global competitiveness, help attract more foreign funds, facilitate and accelerate adoption of best-in- class technology.
"The foreign exchanges can only afford to invest their time and resources if their contribution is rewarded commensurately," BSE said, adding that a larger ownership stake is one way to ensure their engagement.
BSE has also suggested that the government reconsider the ownership norms for depositories - NSDL and CDSL - and revise them to facilitate an ownership to the extent of at least 51 per cent by a stock exchange, from 24 per cent stake currently.
Besides, the leading stock exchange has also made several other suggestions including lowering of Securities Transaction Tax (STT) on equities, introducing parity between corporate bonds and equities in terms of STT and in terms of capital gains taxation and issue a uniform stamp duty policy.
It has also proposed that the ministry modify the e-IPO process in line with secondary market transactions to make the system "much simpler, faster, more efficient and to increase the reach and accessibility of the primary market".
"This will also reduce the number of days for listing from the current 15 days to less than 2 days," BSE said.
Some of the other proposals include executing the trades at the best price across exchanges, bringing in long term instruments like third party warrants, allowing dollar denominated indices to be calculated and traded upon in the country and settled in Indian rupee, are among the other proposals by the BSE to the government.