Investors in London may get the opportunity to buy Chinese bonds on the Shanghai Stock Exchange, if a feasibility study proves positive.

Sherry Madera, the City of London's special representative for Asia, told journalists in the United Kingdom capital on Tuesday that the feasibility study into the Shanghai-London connect will start soon. It could be the first overseas link for China's $10 trillion bond market, following the launch of a flagship connect within China in July, linking Shanghai with the financial hub of Hong Kong.

"The feasibility study is wise," Madera said. "The next step should be London, it's got a much deeper bond market than Hong Kong, so the opportunity is even bigger."

Currently 70 percent of global secondary market bond trading takes place in London, according to the London Stock Exchange Group.

The feasibility study will be led by the UK's Treasury and China's Ministry of Finance.

The initiative was an outcome of the seventh private-sector-led Hong Kong-London Financial Services Forum, which concluded in Hong Kong on Monday. That meeting followed the ninth UK-China Economic and Financial Dialogue, which concluded on Saturday in Beijing. The dialogue had 72 outcomes, including an agreement between the stock exchanges of London and Shanghai to continue a feasibility study into creating a joint market.

China's bond market surpassed that of Japan in June this year to become the world's second-largest, following that of the United States. Despite its size, foreign participation stands at about 2 percent, due to restrictions on foreign investors' access.

Previously, the market was only open to certain qualified foreign long-term investors, which included pension funds and charity funds. Would-be foreign investors that were eligible for Qualified Foreign Institutional Investor (QFII) and Renminbi QFII (RQFII) licences, were restricted in how much they could invest.

But analysts have been forecasting dramatic changes, thanks to the bond connect with Hong Kong.

Morgan Stanley predicted the link will put Chinese government bonds on the world's benchmark bond index within the next 36 months, stimulating inflows of between $250 billion and $300 billion into the Chinese market.

On July 3, the first day of a trial of the platform, 70 overseas institutions clinched 142 deals worth 7.05 billion yuan, reflecting foreign investors' enthusiasm for Chinese bonds.

Meanwhile, the International Monetary Fund's inclusion of the renminbi in its basket of Special Drawing Rights currencies since September is another trigger for global investors to increase their renminbi-denominated asset holdings, predominantly Chinese stocks and bonds.

Madera said a bond connect in London in addition to the Hong Kong connect would be beneficial because London's active bond market means traders can access lower trading costs for bonds.

She added that London's bond liquidity can also help to grow the Chinese bond market's liquidity.

"Right now, it's only (investing into China). With a robust system and large bond markets working together, there may be opportunity for more two-way flows, as investors get more comfortable," she said.