(Yicai Global) Oct. 17 -- China's securities watchdog is reportedly considering specific short-term trading systems for foreign investors to help them invest in Chinese mainland stocks after overseas public funds hoped for clarity on the matter.

The China Securities Regulatory Commission is studying two specific short-term trading systems for foreign investors, namely allowing qualified overseas public funds to calculate the amount of securities held by product with reference to domestic public funds, and exempting the Hong Kong Securities Clearing Company from certain specific short-term trading system, Securities Times reported on Oct. 16.

“Many overseas funds under the same fund management company holding shares of the same Chinese mainland-traded company are required to combine their exposures and to disclose if the total exceeds 5 percent, and if so, they cannot trade the funds within six months,” the head of a leading foreign fund company in China told Yicai Global previously.

“This causes problems for the funds,” the person added, “as foreign investors may have multiple funds to hold a specific bunch of shares in mainland-traded companies.”

Domestic public funds can count the number of securities held by product, meaning that if a fund company holds at least 5 percent shares of multiple public funds and trades its stake within six months, it is not deemed to be short-term trading.

Overseas institutions have been pushing for a policy as the foreign investment drive in the Chinese mainland market has become stronger in recent years, Ge Yin, a partner at Han Kun Law Office, whose clients include numerous international capital managers, told Yicai Global.

Large foreign public funds often have many large sub-funds or exchange-traded funds, so their combined calculation can easily exceed the 5 percent limit, Ge said.

“A lot of global allocation-oriented foreign funds can satisfy their China exposure with one or two Chinese stocks,” the head of another foreign private equity fund in China told Yicai Global.

With the continuous opening-up of China's capital market, foreign investors have become important participants. At the end of last month, foreign investors held a total of CNY2.77 trillion (USD390 billion) worth of so-called A-shares, those traded in the mainland, accounting for 4.4 percent of the total.

In the first nine months of the year, the net inflow of funds into the A-share market via the Hong Kong Stock Connect exceeded CNY52 billion (USD7.2 billion).

Editor: Futura Costaglione