The Chinese government is making gains in modernizing the country’s financial sector and its capital account is already far more convertible than before. Foreign institutions, however, are calling for more loosening of controls over investments in the nation’s stock markets.

Guo Shuqing, the chairman of the China Securities Regulatory Commission (CSRC), believes that China is moving fast towards making the yuan fully convertible.

"At present, we have a very good chance to carry out the strategy of realizing convertibility of [the] yuan and it will not be too long from now," Guo was quoted as saying by the official newspaper China Daily.

"There is no item that is inconvertible," he said. "The country's capital account is actually far more open than is assumed under the estimations of various institutions such as the International Monetary Fund." He said there is no "absolute" and "unchangeable" standard for use in measuring the openness of capital accounts.

Guo also implied that the country would keep some measures to retain its control over the capital account. He said China would be careful about the notion of "fully free convertibility", and convertibility under the capital account doesn't mean there will be no capital control.

"Countries in different phases of development must make their own analyses in accordance with their own methods of opening up and their own situations," Guo said at the opening ceremony held for the 37th annual conference of the International Organization of Securities Commissions in Beijing.

Meanwhile, the official Shanghai Securities News reported that the International Organization of Securities Commission (IOSCO) suggested that China should ease limitations on the trading band of the country’s stock market (it can only move up or down by 10 percent each day) and provide fair competition opportunity for foreign institutional investors.

In the report, IOSCO said China should introduce a Market Maker Rule, further lower trading costs and encourage the use of finance derivative products.

Chinese officials have issued a series of policies to spur the flagging domestic capital market by lowering equity trading fees, allowing the National Social Security Fund to enter the capital market, as well as attracting more foreign investors to invest under the Qualified Foreign Institutional Investor program (QFII).

In financial markets in particular, China has sped up the expansion of channels for foreign investors in the stock market, bond market and futures market. Regulators are improving the processes for QFII approval and quotas, and are also broadening channels for foreign investment in capital markets outside the QFII program.

Earlier this week, the CSRC re-opened the door after 4 years for foreign institutions to take stakes of up to 5 percent in futures companies.

In addition, the China Financial Futures Exchange is expanding collaboration with global bourses. According to Wall Street Journal:

The China Financial Futures Exchange this week sealed agreements with four Western exchange operators, aiming to tap the expertise of established markets following a surge in trading volume. NYSE Euronext and CBOE both announced MOUs with the CFFEX Wednesday. CME and Deutsche Boerse have completed similar pacts, according to persons familiar with the matter.

The agreements generally involve the exchanges exploring opportunities for information sharing; cross-training of employees and cooperation on joint research into developing strategies for the derivatives market, according to announcements Wednesday.