The negotiations are part of a new US-China trade and investment framework, the Wall Street Journal reported on Monday, citing people familiar with the matter.

It reported that the details of the plan still need to be finalized, and any agreement would need to be ratified by the US Senate.

Industry analysts said such a move would be positive for US investment banks and overseas players in general as it would give them greater access to the investment banking sector in China, one of the fastest-growing markets in the world.

The China Securities Regulatory Commission on Monday did not respond to China Daily's enquiry on this matter.

Overseas investment banks currently can only operate in the Chinese mainland market by forming a joint venture with a local partner. The Chinese securities regulator lifted their maximum share ownership in a joint venture to 49 percent from 33 percent in 2012.

Hong Hao, chief strategist at BOCOM International Holdings in Hong Kong, said that the move will likely attract more overseas banks to set up their own investment banking business in China and may prompt some to exit from their existing partnerships with local Chinese securities firms.

US bank JP Morgan Chase & Co has been in talks to sell its stake in its Chinese joint venture with First Capital Securities Co Ltd. Morgan Stanley in 2010 left its partnership with China International Capital Corp and later formed a joint venture with a new partner.

"Global investment banks, as minority shareholders, face a lot of barriers and restrictions when they come to making strategic decisions in the Chinese market. The new policy will be a positive development for them," Hong said.

"The potential of the Chinese securities market will attract more foreign players to form their own entities and the liberalization will also help bring more competition," he added.