China unveiled a plan Thursday to give foreign investors greater access to its stock market by allowing investors in Shanghai and Hong Kong to trade shares on each other's exchanges.

Securities regulators in China and the semiautonomous Chinese territory of Hong Kong said that the stock exchanges in both cities would be connected in a pilot program.

Authorized investors in Shanghai and Hong Kong will be able to buy and sell up to 23.5 billion yuan ($3.8 billion) of stocks in certain companies each day on each other's exchanges under the program, which will launch in six months.

The program ``is an important step in the opening up of the China capital market,'' the China Securities Regulatory Commission and Hong Kong's Securities and Futures Commission said in a joint statement.

Currently, the main way for foreign investors to access China's tightly controlled equity markets is through a quota program for institutions that represents a sliver of the overall market.

While Hong Kong is officially considered a part of China after Beijing regained control of the former British colony in 1997, the Asian financial center has its own separate legal and financial system and currency.

Under the new program, Hong Kong and foreign investors will be allowed to buy as much as 13 billion yuan ($2.1 billion) a day in Shanghai stocks through the Hong Kong market.

Mainland Chinese investors, which will be limited to institutions and individuals holding at least 500,000 yuan in their stock and cash accounts, will be able to purchase up to 10.5 billion yuan daily in Hong Kong stocks through the Shanghai bourse.

Peter Wong, deputy chairman of HSBC bank, said in a statement that the ``landmark'' agreement will give investors greater access to China's growth and allow Chinese to diversify how they invest their savings.

The regulators said the move will also help promote the use of China's currency outside of the mainland. It will also boost Hong Kong's role as a hub for yuan trading by allowing mainland Chinese investors to use the currency to invest directly in Hong Kong's stock exchange.

China has tight limits on the amount of yuan that can be sent outside of its borders. It is gradually loosening controls on its currency and movements of capital but it is likely to be many years before its financial markets and banking industry are sophisticated enough for full liberalization.

News of the cross border link was a boost for stock markets in Hong and Shanghai, with their benchmark indexes rising 1.5 percent and 1.4 percent respectively. (AP)