China intends to connect the Hong Kong and Shanghai bourses and enable total cross-border trading of 23.5B yuan ($3.8B) a day.
Investors will be able to trade 10.5B yuan of Hong Kong-listed shares via Shanghai and 13B yuan of mainland stocks through Hong Kong.
The plan is part of China's attempts to liberalize its economy, with Premier Li Keqiang saying it will "further improve the opening and healthy development of capital markets in China and Hong Kong."
News of the plan helped Chinese and Hong Kong stocks rise despite weak trade figures.
The Shanghai Composite ended +1.4% and the Hang Seng gained 1.7%.