Red chip Legend Holdings hopes to issue China depositary receipts (CDRs) to list on the mainland's A-share market. But chairman Liu Chuanzhi told Reuters there were legal constraints and the final decision rested with the China Securities Regulatory Commission. Legend, China's dominant personal computer manufacturer, is the second red chip to announce the intention of tapping into the A-share market through the issue of CDRs. Last week, China Mobile said it was seeking permission to raise funds on the domestic market by issuing CDRs, making it the first red chip to propose this avenue of funding. CDRs, similar to American Depositary Receipts, are shares of overseas listed companies which are to be listed in China's stock markets, allowing domestic investors to trade foreign-listed companies. Under China's securities rules, red chips - Hong Kong-based and listed companies controlled by mainland parents - are banned from tapping the domestic market because foreign registered companies are not allowed to issue A shares. However, many red chips are keen on tapping the highly liquid China securities market. Analysts said CDRs would be more flexible as the securities regulator would not have to amend its A-share listing regulations. UBS Warburg head of China research Joe Zhang said mainland regulators were reviewing the situation and considering a relaxation of rules to allow red chips access to the domestic securities market. Mr Zhang believed they would eventually come up with new regulations which facilitated value convergence between Hong Kong-listed and domestic-listed companies through A shares. However, some other analysts said that it would be a long time before the convergence could be achieved, as CDRs would need to clear many technical hurdles. Foreign exchange control and stock and banking settlement issues, as well as legal issues, were among the major hurdles that needed to be cleared before the regulator could approve CDRs by either China Mobile or Legend.