SHANGHAI, Jan 21: China is considering a plan to increase foreign participation in its domestic stock and bond markets, seeking to bring more outside capital into the nascent sectors, according to a media report on Saturday.

China initially began allowing foreigners to invest in its financial markets in 2003 under the qualified foreign institutional investor scheme (QFII), permitting overseas mutual funds, insurance companies, securities firms and banks to buy domestic stocks and bonds.

Under a new draft plan, the field of eligible candidates would be expanded to include trust firms, pension funds, charity funds, endowment funds and government investment firms, the Shanghai Daily reported, citing a document being circulated by the China Securities Regulatory Commission.

A spokesman for the CSRC, China’s securities watchdog, had no comment in response to a similar though less detailed media report earlier this week.

Under the draft proposal, new applicants would have to have five years of operating experience and a minimum of $5bn in securities assets under management — half the current minimum of $10bn, according to the document.

The plan is being circulated among banks, stock exchanges and overseas investors for comment, according to the Shanghai Daily.

Under its QFII programme, China has permitted 27 firms to enter the market to date, with four more preparing to enter, according to the Web site of the State Administration of Foreign Exchange, which determines the size of the quota for each participant.

SAFE has granted the 31 participants combined quotas of $5.645 billion to invest in domestic markets.

The receipt of QFII status allows foreign investors to trade in so-called A shares in more than 1,300 domestically listed firms, as well as treasuries and corporate bonds.

The latest opening of its markets would come after China last year said it would more than double to $10 billion the amount that foreign firms could invest in its primary stocks and debt markets from a previous $4 billion.—Reuters