"In this way, local investors will be able to buy shares with new and old money... removing the discrimination between domestic and foreign investors," regulator Charalampos Gotsis.

Domestic investors were barred from withdrawing money from a deposit account to buy securities as part of capital controls imposed in June to stem deposit flight from Greek banks.

They could only buy shares with "new money" brought from abroad, cash they held at home or in a deposit box, or from new bank accounts opened after a previous stock market rule was issued late in July.

"However if domestic investors sell the shares, they cannot export the money," Gotsis told Reuters in a telephone interview.

Foreign investors do face these restrictions.

He also said that he proposed to the capital market committee extending a ban on short-selling bank shares, which was due to expire on Monday, until Dec. 20.

"By then, all new bank shares will be listed in the market," Gotsis said.

(Reporting by Lefteris Papadimas; Writing by Angeliki Koutantou; Editing by Paul Taylor)