China's securities watchdog has allowed overseas investors to hold a higher stake in the country's securities firms, in its latest move 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 the previous investment cap of a third of the companies' equities, according to a statement issued by the China Securities Regulatory Commission (CSRC) on October 16.

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.

The policy change took effect on October 16 and came after previous steps were 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, allowing them to hold up to a 30-percent stake in a listed company, up from the previous 20-percent stake cap.