Hong Kong has submitted a proposal to Beijing on the implementation of a plan to let mainland investors buy shares directly in the city's stock market, according to Joseph Yam Chi-kwong, chief executive of Hong Kong Monetary Authority.
The so-called 'through-train' scheme would be launched after the proposal is approved, said Mr Yam. He did not give a specific timetable but said it should be launched as quickly as possible.
Mr Yam said that in order to generate higher returns the country needed more domestic funds to flow into overseas markets. But he also stressed that opening the capital account would not be as 'simple' as many thought and hence may require close co-ordination between foreign exchange regulators.
The mainland needs to boost cross-border securities transactions and co-operation between brokerages, he added.
Beijing announced on August 20 that mainland retail investors with a Bank of China account in Tianjin would be able to buy Hong Kong equities directly through the so called 'through train' programme. But the programme was soon put on hold after premier Wen Jiabao said on November 3 that the government needed more time to assess risks brought about the programme to Hong Kong's financial system.
Many scholars also thought that time was not 'mature' for the country to launch such a scheme.
Guo Shiping, director of international finance research institute of Shenzhen University said: 'With the programme, the yuan will soon turn into a free convertible currency: something that the government does not want to see at least in the near future.'
