China is preparing a pilot program that will allow foreign investment banks to buy stakes in local securities firms by the end of the year, the Financial Times reported. The program would allow a small number of firms to buy up to 20% in existing Chinese brokerages. Foreign investment banks would also be allowed to own up to 33% of new securities industry joint ventures with local partners. The new rules would end a two-year moratorium on foreign investment in the securities industry that was supposed to help local firms prepare for increased competition. Greater liberalization of the securities industry has been an issue brought up by US Treasury Secretary Henry Paulson in frequent talks with Chinese authorities. Foreign investment banks are currently shut out of underwriting and trading mainland stocks, mainly operating in joint ventures in which they have no management control.