In its monthly report to the securities association, CITIC reported inaccurate numbers on its over-the-counter derivative business, the Securities Association of China (SAC) said.
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The investments organization, that will be partially supervised from the China Securities Regulatory Commission, stated it had been examining the overstatement of Citic and might take action if required.
The CSRC did not respond to calls requesting comment.
According CSRC’s window guidance, brokerages must cease such swap businesses, while existing businesses can not be extended upon maturity.
“High leverage and over-the-counter financing is one of the factors that has led to the stock market turmoil this year”.
CHINA’S biggest brokerage, Citic Securities, overstated its derivative business by $166 billion (£110 billion) from April to September, according to the country’s securities association.
CITIC added that the current size of its swap business is no larger than 40 billion yuan.
The signboard of CITIC Securities at its head office in Beijing. “You can borrow money, but at a low ratio, otherwise it may become a high-risk market like the futures market, which was unacceptable to the authorities”.
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President Cheng Boming is among seven Citic Securities executives named by Xinhua News Agency as being under investigation, part of a financial-industry crackdown as the government seeks to assign blame for the nation’s summer stock-market rout.
