A stock indicator shows the benchmark Shanghai Composite Index on Sept 2, 2015. [Photo/IC]

SHANGHAI -- China's two stock exchanges in Shanghai and Shenzhen have released draft regulations on program trading.

The regulator has previously stated that program trading, a computerized automated trading scheme used by investors to trade large quantities of shares, can sometimes be abused to bring more volatility to the market and contributed to the recent collapse of Chinese stocks.

The rules cover applications, net buying quotas, trading behavior supervision and risk control. Brokers and futures firms may be held responsible for risks associated with their clients program trading activities.

The Shanghai Stock Exchange will intervene should automated trading strategies bring chaos to the markets. The intervention could go from limiting trading on certain accounts to temporarily shutting down the market.

Shanghai also plans to impose a fee on frequent order withdrawals but said the fee will not apply to normal trading and could be reduced or waived for market makers for certain securities, and for liquidity providers.