UPDATE 1-Shanghai Stock Exchange to lure institutional investors-paper

Tue Aug 28, 2012 10:47pm EDT

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(Adds details on type of funds allowed to list)

SHANGHAI Aug 29 (Reuters) - China may allow so-called "sunshine" private trust funds, a prototype of hedge funds, to list on the Shanghai Stock Exchange when conditions are suitable, as part of a broader push to move the bourse away from being dominated by retail investors, an official newspaper reported on Wednesday.

"Sunshine" funds, which are similar to hedge funds but more transparent, may be allowed to register with the stock exchange to sell products and provide services, and when conditions are ripe, some may be allowed to list, the China Securities Journal said.

The move to allow these funds to register with the exchange could help broaden the reach of the funds.

China's 72 million retail investors account for about three-fourths of trading on the domestic stock exchanges.

Zhang Yujun, the general manager of the Shanghai Stock Exchange, was quoted as saying the exchange was also considering a series of measures such as offering targeted services and new regulations to make itself more attractive for institutional investors. (Reporting by Melanie Lee; Editing by Kazunori Takada and Eric Meijer)

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