Chinese companies may be allowed to sell D-shares on a German-based exchange in 2017, sources with the Shanghai Stock Exchange (SSE) have revealed.

The proposal is now in the hands of the Frankfurt-based China Europe International Exchange (CEINEX).

The CEINEX is an off-shore yuan-denominated assets trading center that was established in December 2015 by the SSE, German Borse Group and the China Financial Futures Exchange.

The sources said blue-chip manufacturers listed on China's A-share market with a clear international development strategy are likely to be selected as the first to issue D shares. More companies will be encouraged to trade as the D-share market develops.

Companies will need approval from both Chinese and German regulators to issue D-shares, the sources added.