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On 6 February 2023, SZSE officially launched the bond market-making business. Since the first month of the launch, the SZSE bond market has been running stably, and the quote activity has increased significantly. The first batch of 12 bond market makers actively provided continuous market-making and quote services in an orderly manner and offered rational price guidance to the market, initially achieving the positive effect of improving pricing efficiency, enhancing market liquidity and strengthening market stability, and steadily advancing the development of the secondary bond market.
In the first month of the market-making policy, the first batch of bond market makers, including Essence Securities, Orient Securities, Guotai Junan, Guosen Securities, Huatai Securities, Shenwan Hongyuan, China Galaxy Securities, China Merchants Securities, China Securities, CITIC Securities, Caitong Securities and Sinolink Securities, actively fulfilled their market-making obligations by providing continuous bilateral quotes for market-making bonds through matching and clicking to offer pricing reference to the market. The first batch of market makers declared a total of approximately 90 market-making bonds, covering interest rate bonds, corporate bonds and asset-backed securities, and their custody scale accounted for approximately 6% of the total custody volume of bonds in SZSE. The bond types and scale are reasonably covered.
The bond market-making business of Shenzhen market in its first month of operation has the following features. First, the bond quote activity increased significantly. Market makers provided centralized and continuous quote support for market-making bonds, with an average of over 27,000 quotes per day, of which the 10 main market makers accounted for more than 99% in terms of the number of quotes for benchmark market-making bonds, up hundreds of times from that before the launch of the business. Second, the turnover of market-making bonds surged. The average daily turnover of market-making bonds in the first month reached nearly CNY 800 million, up 34% from the turnover before the launch of the business and accounting for 8% of the average daily turnover of existing bonds. The average daily turnover of market-making interest rate bonds increased several times compared to the pre-launch period, of which approximately 70% was participated by market makers. The market-making transactions covered such ways of trading as matching, clicking and negotiation, and the market-making convenience functions such as consolidated reporting of negotiated transactions were effectively applied. Third, both the quoted spreads and the transaction price deviations toned down and the pricing efficiency improved. The quoted spread of market-making bonds narrowed significantly, and some quoted spreads of interest rate bonds narrowed to CNY 0.001. The average value of the deviation of the transaction price of market-making bonds from the corresponding valuation narrowed by 0.07% to 0.03% compared to that before the launch of the bond market-marketing business.
Developing the bond market-making business and continuously enhancing the market functions are the important moves of SZSE to boost the secondary bond market. In recent years, SZSE has vigorously promoted the development of the secondary bond market. Last year, SZSE issued and implemented the new regulations on bond trading, and implemented the reform of the “separation of stocks and bonds” in the bond trading rules and system. Next, in accordance with the unified deployment of the CSRC, SZSE will actively collaborate with all market players to conduct the bond market-making business in an orderly manner, continuously assess the market operation, improve the price discovery mechanism in the bond market, optimize the bond market-making support mechanism, and further reduce the liquidity premium and bond issuance costs to boost the high-quality development of the exchange bond market.
