The nod will give the Swiss bank access to China's burgeoning financial services sector.

"UBS confirms the China Securities Regulatory Commission has issued preparatory approval for the restructuring of Beijing Securities," a spokesman said Tuesday.

The approval marks a key step toward UBS becoming the first foreign investment firm to buy directly into a Chinese brokerage. UBS unveiled plans last September to take a 20 percent stake in Beijing Securities.

Major investment banks are scrambling to get a foothold in China to take advantage of the country¡¯s fast-growing and potentially lucrative financial sector.

Goldman Sachs was involved in the launch of Beijing Gao Hua Securities late 2004.

Other foreign firms seeking investment in domestic brokerages include Merrill Lynch JP Morgan Chase, Morgan Stanley, HSBC Holdings, Credit Suisse and Citigroup, industry sources have said.

Last September, UBS said it expected to invest 1.7 billion yuan (US$212.3 million) to take a 20 percent stake in Beijing Securities, a domestic brokerage which has the necessary licenses to operate a range of businesses that could include domestic debt and equity underwriting in China.

A group of Chinese domestic investors will also hold stakes in brokerage as part of a restructuring.