The LSE will now be able to extend its membership to Hong Kong trading firms.

The London Stock Exchange has received regulatory approval from Hong Kong's Securities and Futures Commission to offer membership to Hong Kong firms.

The approval means Hong Kong trading firms will be able to become members of the London Stock Exchange and therefore directly access Europe's most liquid and international markets, as well as the LSE's derivatives market.

“This is a significant development in further deepening the ties between London, Hong Kong and China,” said London Stock Exchange's chief executive, Alexander Justham, in a statement.

“Like Hong Kong, London has always been a market open to the world and we are excited about the increasingly strong relationship being forged between these two exceptional global financial centres.”

The news reflects the LSE Group's drive to build its relationship with Greater China. Since the beginning of 2014, seven new Chinese companies have been admitted to the exchange; 10 new renminbi bonds have been issued in London and six new RQFII exchange-traded funds have listed on the market, including the first exchange-traded fund in Europe denominated in renminbi, the LSE said.