New Delhi, July 19 -- Indian stock exchanges could face pressure on trading volumes and earnings in the coming years as revised regulations on margin funding raise financing costs for proprietary traders and high-frequency trading firms, potentially weighing on the sector despite strong long-term growth prospects for India's capital markets, according to a research report by Dolat Capital.

The brokerage expects the new regulatory framework to moderate proprietary trading activity, with the impact likely to be most significant for exchanges with high exposure to proprietary books.

According to the report, bank guarantees previously enabled proprietary desks to leverage their market exposure. However, revised RBI norms have curtailed this...