Market Maker System On China’s Inter-bank Bond Market Liquidity

In recent years, as the development of bond market policies promulgated and implemented, the overall framework of China’s bond market has been established, its basic functions also be initially apparent. But overall, compared to stock markets, China’s bond market is still in the initial stages of development. As to bond trading market, there are three departed market in China, the counter market, the exchange market and the inter-bank market. They are not associated, and a unified national interconnected bond market has not been established. At the same time, these markets are facing market quality problems, such as lack of market liquidity, low efficiency, therefore, how to improve the quality of China’s bond market is an important and urgent issue.From the perspective of the development of foreign bond markets, bonds are usually trading in the OTC market, the trading mechanism of the OTC market is quote-driven mechanism.The impact of different trading mechanisms on market quality, in recent years, has become a focus of concern to foreign theoretical and practical profession.From point of view of the domestic research recently, some researchers began to study the quality of China’s bond market from the theory of the market microstructure. Overall, the use of market microstructure theory is more common in the research of stock market. The study of the bond market from the view of market microstructure theory is still waiting for in-depth study.Achieving function of the bond market in China needs to improve the quality of the bond trading market. Liquidity is an important indicator as a measure of security market quality, not only reflect the market reliable ability but also a good measure of a market maturity. Liquidity as one of the public property of security market, has been throughout the whole process of the market. At the same time, due to limited space, only to study the impact of trading mechanism to market liquidity in this paper.Inter-bank bond market as China’s largest securities market, was also the market which first introduced formal financial OTC market maker system, has accumulated nearly15years of experience and related data. Inter-Bank bond market provides a very valuable sample for the research of the effect of trading mechanism to market liquidity. So, the study of market maker system in inter-bank bond market of China has a strong theoretical and practical significance...