It was not possible to reach Yao for comment and unclear if he has a lawyer or what the detailed accusations are against him.
But the move comes as authorities work to restore confidence in the stock market after a fumbled intervention and suspicion of irregular trading following market turmoil which began in June.
Since then, authorities have swept up market participants, journalists, fund managers and social media commentators in a crackdown on alleged market manipulation.
China`s financial regulators have been under heavy pressure since stock markets collapsed in mid-June following a long bull run, though the statement made no mention of the markets.
Yao, 53, is the second senior CSRC official to come under investigation following the market turmoil. He has a doctorate in economics and took up his current job in 2008, according to his official resume.
In September, the graft watchdog began a probe into an assistant chairman at the securities regulator called Zhang Yujun, also for suspected serious violations of discipline.
China`s Cabinet said on Friday it had asked financial regulators to improve their supervision of market players to better protect consumer rights.
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