The news was released quietly on Saturday by state-run Xinhua News Agency.
Xiao's replacement is Liu Shiyu, chairman of the Agricultural Bank of China, who also previously served as a vice-governor of China's central bank, the PBOC, according to Xinhua.
In January, the CSRC strongly denied a media report that Xiao was leaving the regulatory agency.
Xiao became CSRC chairman in March 2013. Prior to that, he was head of the state-owned Bank of China for 10 years.
Last year, regulators helped fuel participation by domestic retail investors in China's markets by changing rules on the use of borrowed money for trading. A massive sell-off eventually ensued, and strong volatility spread across global markets.
The CSRC was also criticised by international investors for what appeared to be haphazard market intervention, such as imposing new rules on selling positions in stocks, seeking scapegoats for the market plunge, and applying a crude market “circuit breaker”, then removing it after bad results.
“[W]e think the badly designed circuit break system is largely responsible for the recent selloff of China’s equities,” Qinwei Wang, China macroeconomist at Pioneer Investments said last month. “It exaggerates market volatility rather than [reducing] it.”
Since 1 January 2015, China’s A-share index went through some wild swings that investors linked to China's regulatory actions: