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* CITIC Sec overstates derivatives business by $166 bln
* Mistake appears in statistical report to industry body
* CITIC says error due to IT upgrade; no impact on earnings
* Brokerages firm under pressure by regulators after summer crash
By Shu Zhang and Nicholas Heath
BEIJING, Nov 25 (Reuters) - CITIC Securities Co, China’s biggest brokerage, overstated some of its financial derivatives by more than 1 trillion yuan ($166 billion) in monthly reports from April to September, the country’s securities association said.
The Securities Association of China (SAC) said that CITIC reported inaccurate numbers in statistical reports on over-the-counter equity swap deals partly carried out during the summer’s stock market rout.
The SAC, a quasi-regulatory body supervised by the China Securities Regulatory Commission, said it was investigating the matter, but has not accused CITIC Securities of any wrongdoing.
As the wrong figures were not included in CITIC’s quarterly financial filings, the brokerage’s reporting error has no impact on its reported earnings, an investor relations representative at CITIC told Reuters, and CITIC’s shares were largely unmoved by the announcement.
The over-the-counter derivatives figure was simply “a business indicator required by the regulator”, the representative said.
In an emailed statement, CITIC said the error was caused by a system upgrade, and the figures were amended at the beginning of this month.
The issue emerged amid wide ranging investigations by the authorities into brokerage misdemeanors after China’s stock markets crashed in the summer. The official Xinhua news agency reported in August that four CITIC Securities executives had owned up to insider dealing.
CITIC said the current size of its swap business is no larger than 40 billion yuan.
CITIC Securities’ Shanghai-listed shares closed down 0.69 percent on Wednesday, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.74 percent.
$1 = 6.3888 Chinese yuan renminbi Reporting by Shu Zhang and Nicholas Heath, with additional reporting by Samuel Shen and Engen Tham in SHANGHAI; Editing by Simon Cameron-Moore, Lisa Jucca and Ian Geoghegan