According to China's securities regulator, the government wanted to expand a program allowing overseas investors to buy local shares and was studying the introduction of trading in warrants. The chairman of the China Securities Regulatory Commission, said at a briefing Monday in Beijing that they are working with the relevant departments to further expand the qualified foreign institutional investor pilot program.

He didn’t mention the timing of the program, as to when it would be expanded or by how much. As of now, overseas companies are allowed to invest in yuan-denominated shares and bonds through the program. Among the 26 investors, who are allowed to invest up to US$4 billion under the program, Morgan Stanley and Deutsche Bank AG are among them. In order to reduce US$250 billion of State shareholdings in some of the country's biggest companies by choosing four companies for trial sales of nontradable shares, China’s government revived May 9 a twice-scrapped plan.

Baoshan Iron & Steel Co. and China Yangtze Power Co., was expanded. Hebei Jinniu Energy Resources Co., Sany Heavy Industry Co., Tsinghua Tongfang Co. and Shanghai Zi Jiang Enterprise Group Co., were selected by China, last month. This was for the pilot program, in order to sell nontradable shares. Shang said that the regulator will gradually carry out the reform of non- tradable shares by following the approach of `pilot companies go first. He further said that the government was looking for investment from insurance companies and pension funds. As of now, nontradable shares are held by cities, provinces and the central government and include so-called legal person shares, held mostly by State-owned companies. Sangh said that the commission would increase cooperation with the Hong Kong regulator.

China’s government is planning to convert its holdings into tradable shares to help fund a pension shortfall and improve corporate governance by increasing the voting power of independent shareholders. Major stockholders were ordered by the securities regulator, in order to distribute to small investors compensation in the form of stocks or cash for price declines.