THE China Securities Regulatory Commission is vetting an application from E Fund Management to start the mainland's first exchange-traded fund tracking the Hong Kong-listed shares of Chinese companies.
The application for the fund linked to the Hang Seng China Enterprises Index was accepted on February 8.
E Fund, based in the southern city of Guangzhou, is China's third-largest asset management company, with 126.2 billion yuan ($A18.7 billion) of assets.
Introducing new products may help bolster stock-trading turnover in China that has fallen to three-year lows as the economy slows.
The exchange-traded fund linked to Hong Kong stocks was part of a range of measures unveiled by Vice-Premier Li Keqiang last year, to increase cross-border investment between the mainland and the former British colony.
"It will be China's first ETF fund investing in Hong Kong's stockmarkets," Lu Huitian, an analyst at Howbuy, said.
"Mainland investors will have more investment options as ETFs are very convenient for them to buy and sell, while it's also definitely a boost to Hong Kong stocks."
Hang Seng Indexes Company had been working with two fund management companies to create funds tracking Hong Kong stocks that would trade in China.
China is seeking to bolster its financial markets as growth in its economy cools and foreign investment moderates.