The CSRC also said that it will strictly control automated program trading, curb excess speculative trading of stock index futures and better regulate the margin financing business that allows investors to borrow money to trade stocks.

Meanwhile, People's Bank of China Governor Zhou Xiaochuan said at the G20 meeting in Turkey that the correction in China's stock market is almost over and the country's financial markets are expected to become more stable.

The valuations of the benchmark Shanghai Composite Index has dropped from 25 times earnings to 15.6 times. The outstanding value of margin financing has also decreased from the previous peak level of 2.27 trillion yuan ($370 billion) to about 1 trillion yuan, indicating that the overall level of the risky leveraged trading has shrunk, according to the CSRC.

"The worst time may have passed, especially for the good-quality blue chips and stocks of companies with long-term growth potential," Li Kongyi, a strategist with Fortune Securities Ltd, said in a research note.