BEIJING -- China's securities watchdog on Tuesday allowed overseas investors to hold higher stakes in the country's securities firms, its latest effort to relax controls on foreign investment in the financial industry.

Overseas investors can now hold stakes as high as 49 percent in joint-venture securities firms, compared with an investment cap of a third of those companies' equities previously imposed, according to a statement issued by the China Securities Regulatory Commission (CSRC).

At least one domestic investor should own a stake of no lower than 49 percent in such joint venture securities firms, but the restriction does not apply to listed securities firms, the CSRC said.

In another statement, the CSRC said securities firms, including joint ventures, can apply for permission to expand their businesses two years after going into operation in China, shortening the period from the previous five years.

The policy changes took effect on Tuesday and came after other steps taken by China to further open its financial markets and ease restrictions on foreign investors.

In July, the country lowered its threshold for qualified foreign institutional investors (QFIIs) and allowed them to hold up to a 30-percent stake in a listed company, up from the previous 20-percent stake cap.

The government has also accelerated QFII approvals since the start of 2012, and increased total QFII quotas to $80 billion from the previous $30 billion in April.

Seven more QFIIs were approved in September, bringing the total number of QFIIs in China to 188, the CSRC said on Tuesday.

China launched its QFII program in 2002 to allow overseas investors to make investments in China's stock market under a preset investment quota of $10 billion.