China's securities watchdog has reiterated that brokerages should not help illicit share financing, amid rising concerns on highly-leveraged capital in a bullish stock market.

Securities companies were asked not to help illegal lending to share purchases, according to an announcement of China Securities Regulatory Commission (CSRC) released Friday.

The regulator has been seeking to de-leverage the rampant market, which was propped up by steady investor confidence and rapidly-growing margin trading.

A draft rule was released by the CSRC on Friday, confining the volume of margin trading conducted by each brokerages to four times their net capital and demanding the clients should be fully aware of the risks in this business.

The CSRC said it aimed to strengthen risk management and protect investors' interests.

Any violation including insider dealing and activities that facilitate illegal trading is prohibited, the draft said.

China's benchmark Shanghai Composite Index surged over 60 percent from the beginning of the year, while margin trading also rose high to more than 2 trillion yuan from slightly above 1 trillion yuan at the end of last year.

Through margin trading, stock investors can borrow a maximum of fourfold their own capital from brokerages, boosting shares but also adding to bubbles.

The authority is soliciting public opinion on the draft, which, CSRC spokesperson Deng Ge said, will improve current system, prompt orderly business and ensure a stable market.

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