SHANGHAI, Jan 7 (Reuters) - China"s securities regulator said on Friday it will pilot market-making on Shanghai"s Nasdaq-style STAR Market in a bid to deepen reforms and improve liquidity. Qualified brokerages can apply to act as market-makers on STAR, in a pilot scheme that will be steadily expanded, the China Securities Regulatory Commission (CSRC) said in a statement. CSRC also published corresponding draft rules on market-making, in which brokerages actively quotes in a security, providing liquidity and depth to markets, while profiting from the difference in the bid-ask spread. CSRC is introducing market-making now because "the STAR Market has been operating smoothly, and various reform measures have been effective," the regulator said. STAR, set up in 2019 to fund China"s technical innovation,, currently hosts 379 listed companies worth a total of 5.3 trillion yuan ($831.57 billion) in market value. According to the draft rules, market makers can trade using its own shares, as well as borrowed shares. Regulators will closely monitor risks in brokerages" market making business, as such activities can both curb, and boost market volatility, CSRC said. ($1 = 6.3735 Chinese yuan renminbi)