BEIJING'S Securities Trading Automated Quotations System (STAQ) for China's legal person shares will use a satellite link for direct access to the Shanghai and Shenzhen stock exchanges for ordinary shares dealings. Li Yi, manager of STAQ's market operation and regulatory division, said the body signed agreements with both stock exchanges for direct computer links last month, beginning in July. ''STAQ will become a sub-market for China's individual shares [or A shares]'', giving institutional investors a channel to trade in shares listed in Shanghai and Shenzhen, Mr Li said. ''Because of technological constraints for the time being, we hope institutional investors in Shanghai and Shenzhen will trade in legal person shares through STAQ,'' he said. ''Individual investors could get access to STAQ in the future, but this would depend on a breakthrough in government policy.'' There are four categories of shares in China, namely state shares, legal person shares, ordinary shares (A shares) and special B shares held by overseas players. Legal person shares are officially confined to legal entities, including state departments or government-controlled enterprises. ''We worry that the stock exchanges in Shanghai and Shenzhen could draw away the funds of institutional investors from the legal person shares market, but we think a direct computer link among the three markets will be conducive to overall development,'' Mr Li said. China's market for legal person shares has been in the doldrums for almost a year, after the securities watchdog imposed a ban on new listings on STAQ and the National Electronics Trading System (NET) in May last year. The two are the mainland's only trading systems for legal person shares. Mr Li said turnover of legal shares on STAQ had dropped significantly, averaging two million yuan (about HK$1.77 million) to three million yuan a day, compared with a peak of 270 million yuan a day before the ban was implemented. He said investors' confidence was shaky because the long-awaited rules governing legal person shares had still not been instituted. Mr Li said he did not anticipate a fully fledged market recovery until this was cleared up. The regulations are being formulated by the State Commission for Economic Restructuring, with the advice of the China Securities Regulatory Commission, he said. The legal person shares market is one of the experiments of China's securities reforms, and its prospects largely hinge on the Government's view of the market's role. ''I suspect the four categories of shares will be brought together eventually. Legal person shares are only transitional products, but they are indispensable,'' Mr Li said. There are 17 legal shares listed on the two legal person shares systems - 10 on STAQ and seven on NET.