Compare The Market Quality Between China Inter-Bank Market And Fix Income Securities Electronic

Market Segmentation phenomena in China bond market is serious, and the inter-bank market plays a main role while the exchange market is being marginal. Fix income securities electronic flat was built under this background. The flat introduces the market maker mechanism, double hiberarchy, and different settlement methods to different kind of bonds. It has affected the structure of bond market deeply. There are many similarities between the inter-bank bond market and fix income securities electronic flat in the market microstructure. In order to examine the behavior of these two markets, this paper compares the market quality of these two markets to see if the fix income securities electronic flat is better than the inter-bank bond market. We try to find if the electronic flat will be the main trading room for bond.This article's analysis is under the background of the market microstructure of the literature. Firstly, we sort out the microstructure evolvement process of China's bond market. It makes us have a clear understanding of the development of China's bond market.Then,describe the microstructure of inter-bank bond market and fixed income platform from the market participants, trading products, trading size, trusteeship and balance, trading mechanism. It makes us know the differences in the microstructure of these two markets. This paper focus on comparing the market quality of these two markets under the current microstructure, according to market quality evaluation criterion, respectively from liquidity, volatility, efficiency these three angles to measure the quality. Due to these two markets both introduce the market-maker system, and this system design has something important to do with the market quality. So examining the relationship between market makers and the market effectiveness appears to be more practical significance, therefore at the effectiveness, this paper mostly examines market maker's quoted price offer guidance of bond prices. Through empirical analysis found that: Overall, the fixed-income platform's liquidity level is better than the inter-bank bond market, the primary dealers system of the platform is more perfect, and it makes improving bond market liquidity. From the volatility of measurement results, fixed-income platform's bond trading is more active than the inter-bank bond market, it means fixed-income platform's functionality and efficiency should be stronger. From the market-making mechanism and market efficiency, market makers offer guidance for bond prices are both relatively obvious, the efficiency of market makers of fixed-income platform is higher. In general, the market quality of fixed-income platform is better than the inter-bank bond market, it is relate to its two-level structure of the market, which shows that mechanism innovation in fixed-income trading platform is successful. But compared with developed countries, China's bond market development is still dropping behind. There is a great space to improve the bond market quality. Finally, the paper put forward some advice to enhance the quality of China's bond market thereunder conclusions of the research.