The Financial Conduct Authority has backed a cross-border agreement which will allow UK-listed companies to sell shares on the Shanghai Stock Exchange.
The Shanghai-London Stock Connect is due to launch today (June 17) and will allow investors and companies in the UK and China mutual access to each other's capital markets, in a bid to "encourage cross-border investment".
The scheme is a joint initiative between the London Stock Exchange and Shanghai Stock Exchange, launched after four years in the making and with the FCA and China's regulator announcing their backing of the scheme earlier today.
The agreement will allow Shanghai-listed Chinese companies to apply to trade on a newly formed Shanghai segment of London Stock Exchange’s main market, while companies with a premium listing in the UK will be able to apply for admission to the main board of the Shanghai Stock Exchange.
The structure is the first of its kind in China and is intended to offer Chinese investors access to international securities via an exchange located in their own country and currency.
Andrew Bailey, chief executive at the FCA, said: "This new scheme will deepen and strengthen connectivity between UK and China capital markets to the advantage of both countries.
"We both believe in the positive contribution regulators can make in international capital markets, and the new co-operation we’re announcing today will be an important contributor to the success of the scheme."
The regulator said it hoped the scheme would offer UK institutional investors a "broader opportunity" to access the Chinese market.
Launching the Stock Connect's first day of trading at the London Stock Exchange today, Chancellor of the Exchequer Philip Hammond is expected to say: "London is a global financial centre like no other, and today’s launch is a strong vote of confidence in the UK market.
"Stock Connect is a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia."
There are almost 1500 companies listed in Shanghai, more than 260 of which are potentially eligible to take part in Stock Connect and list in London.