THE Shanghai Securities Exchange has given permission for 20 foreign securities companies to trade in Chinese B shares, taking the number of foreign dealers to 23. Opening the door to more foreign traders is a significant step for the exchange, despite opposition from local brokers who fear fierce competition from overseas financial houses. ''Through this new arrangement, we hope we can activate the B-share market and further develop the practice into an international standard,'' said an exchange official responsible for membership. ''We'll continue to grant more seats [membership] to foreign securities companies to trade B shares this year as many foreign firms have made the requests.'' Shenzhen's vice-mayor Mr Zhang Hongyi has said the Shenzhen Securities Exchange will also grant permission for foreigners to trade B shares. Although Mr Zhang refused to disclose information, it is believed a large number of foreign securities companies - including Baring, Wardley, Barclays and H. G. Asia - will receive approval. Three International brokers - Jardine Fleming, Standard Chartered and Baring - were admitted to make B-share transactions in Shanghai early last month. The 20 newly appointed brokers include Sun Hung Kai Securities (HK), SBCI Securities (Swiss), Credit Lyonnais (UK), Tung Shing (HK), Wardley James Capel (UK), Smith New Court (UK), Barclays (UK), Pacific Capital (Taiwan), Peregrine (HK), H. G. Asia (HK),Nomura (Japan), Merrill Lynch (US), Sasoon (Singapore), OCBC Securities (Singapore), Kankaku Securities (Japan), Yamaichi International (Japan), Bookook Securities (Korea), Kim Eng Securities (Singapore), PBI Securities (Holland) and Morgan Grenfell (UK). Under Chinese regulations foreign financial companies are not allowed to directly participate in China's local market. Previously, all foreign securities companies had to trade B shares for foreign investors through local counterparts. With the new arrangement, the 23 appointed dealers in Shanghai can trade B shares directly but have to take up the seats on behalf of local brokers. Of the 23 foreign firms, nine were nominated by Shanghai Shenyin Securities, with eight by Shanghai Haitong Securities and six by Shanghai International Securities. Mr Lawrence Ang, associated director of New Smith Court, said: ''It's a long-term investment. In the short-term, it won't make any significant profits. But in the long-term the Chinese B-share market is a sound prospect.'' At present, there are about 550 members at the exchange. Each seat costs 600,000 yuan (HK$809,000). According to the Shanghai Securities Exchange it plans to increase the number of seats to 2,000 by the end of the year. And it will build another trading hall in Pudong within three years.