The China Securities Regulatory Commission has said that the US-China Strategic and Economic Dialogue, held in Beijing in June, confirmed that qualified foreign and joint-venture enterprises can be registered as private securities firms with the Asset Management Association of China.

Registration of private securities firms with the association means that they get licenses to invest in the Chinese stock markets.

Previously, foreign companies were not allowed to be registered as private securities firms.

"The new move can attract more excellent asset management institutions from abroad to enter the Chinese market and thus diversify participants in the capital market," said Zhang Xiaojun, a spokesman for the CSRC. "It also deepens the opening up of the Chinese capital market."

The Asset Management Association of China said that qualified private securities firms to be registered should be set up in China and that their overseas shareholders should be approved by the financial regulators in those countries or regions.

Jackson Lee, chief representative of the Beijing office of global asset management company Fidelity International, said this was good news.

In October, Fidelity set up a foreign-owned company in Shanghai to complement its initiatives in China.

"We are pleased to hear this piece of good news and would like to increase investment exposure in China," said Lee. "We will follow the policy and have close communications with regulators."

Liu Shiwei, a partner of Shanghai Yuelu Investment, said individual investors are the main group in China's stock market, so it was very important to increase the proportion of institutional investors.

"It also creates a healthy competitive environment in China's capital market," said Liu. "Many foreign private securities firms have good investment ideas and strategies and risk control capabilities, so domestic partners can have closer communication and cooperation with them."

At the SED meeting last month in Beijing, the Chinese government made a commitment to gradually increasing the shareholding proportion of qualified foreign financial institutions in securities firms and asset management companies.

There were 10,769 private securities firms registered with the Asset Management Association of China with 2.2 trillion yuan ($330.4 billion) under management at the end of May, according to data from the association.