An LSE spokesman said the company hoped dual listing arrangements between the Hong Kong and London markets would be in place by the end of the year.

For companies, listing in both London and Hong Kong would give a greater number of investors access to their shares.

The rules and procedures governing listings on the two bourses are already relatively similar, and the London Stock Exchange and Hong Kong Exchanges and Clearing Ltd. are in talks to iron out the remaining differences.

Once done, companies could float their shares on both markets with using the same prospectus, saving costs.

Looking east

The proposed agreement between the two exchanges comes as the Hong Kong market is striving to attract market listings from mainland Chinese companies.

The LSE is also keen to attract more foreign listings, promoting itself as the home of some of the world's biggest investors.

"This will be of benefit to all sorts of companies, but the focus is on Hong Kong and mainland Chinese companies," the LSE spokesman said.

But the proposed deal still requires the backing of market regulators in the UK and Hong Kong.

The LSE, facing growing competition from Deutsche Boerse in Frankfurt and Paris-based Euronext, has been striving to forge alliances with other exchanges in an effort to shore up its position as Europe's pre-eminent financial hub.

The LSE came in for heavy criticism three years ago after it cancelled a planned merger with Deutsche Boerse to fight off a hostile bid from Sweden's OM.

A second attempted tie-up came to nothing the following year when Liffe, the London derivatives market, chose to merge with Euronext instead.