Trade between the Shanghai and Hong Kong bourses will be settled in yuan, said the Chinese mainland security regulator on Friday.

This will be different from the current Qualified Foreign Institutional Investors (QFII) mechanism, which allows investment in overseas currencies, said Zhang Xiaojun, a spokesperson for the China Securities Regulatory Commission (CSRC).

The pilot program will not affect QFII, said Zhang.

The program is designed to promote the internationalization of the yuan and the development of Hong Kong as an offshore yuan business center, said a joint statement by the CSRC and the Hong Kong Securities and Futures Commission on Thursday.