(Yicai Global) April 22 -- China and Japan have agreed a deal to cross-list their exchange-traded funds, a key milestone in the two-way opening up of their securities markets.

The Shanghai Stock Exchange and Japan Exchange Group signed an agreement to link ETFs at their first bilateral securities market forum in Shanghai today.

The agreement will enable investors to buy stocks in each other's markets via exchange-traded funds. The so-called ETF Connect could kick off as early as next month, the Nikkei Asia Review reported on April 16.

The move is very important to deepening the cooperation and development of the two countries' markets, China Securities Regulatory Commission Chairman Yi Huiman said at the forum. It will enhance both the cross-border publicly-offered funds system and convenience for investors in both markets, he added.

During a visit by Japanese Prime Minister Shinzo Abe last October, the CSRC and Japan's Financial Services Agency penned a memorandum of cooperation that covered the cross-listing of ETFs. China had already extended a CNY200 billion (USD30 billion) quota to Japan under the Qualified Foreign Institutional Investor last May when Premier Li Keqiang visited Japan.

This shows that there is a great capacity for bilateral cooperation in the securities markets, Yi said.

Japan holds significant long-term funds and needs to invest in capital markets with reasonably high returns such as China's, while the Chinese market seeks long-term funds, CSRC Vice Chairman Fang Xinghai told the forum. China has considerable savings and to avoid risk it needs to invest part of that in Japan, which offers relatively stable returns, he added.

"Looking to the future, the opening-up and cooperation between the capital markets of China and Japan can yield new opportunities for growth and has huge potential," Yi said.