SHANGHAI (REUTERS) - China may open up its commodities futures markets to overseas and financial investors, the country's securities regulator said, as the world's top consumer of many raw materials seeks to play a larger role in setting global commodities prices.

China's commodities exchanges will also maintain a close eye on movements in the futures market, China Securities Regulatory Commission (CSRC) vice-chairman Fang Xinghai told a conference.

A surge in prices of China commodities futures this year followed by a rapid slide have sparked fears of a boom-and-bust cycle.

Mr Fang said opening up the market would help support China's role as a "price maker" globally and enable domestic firms to better cope with market volatility.

"China's commodities market should be opened up to offshore investors," he said, adding the country would look to start doing so in products such as crude oil, iron ore and rubber.

The regulator is also examining allowing banks and other financial institutions to enter the market, he said.

Industrial players, which use the commodities futures market for hedging, were rattled earlier this year by spikes in iron ore, cotton and even egg futures linked to a flood of investment from speculators, sparking concerns of risk of a repeat of last year's crash in Chinese stocks.

At present, foreign companies have limited access to China's commodities markets. Companies are only allowed to trade via brokers after setting up a locally registered non-financial unit, which requires a hefty amount of registered capital.