Core Viewpoint - The People's Bank of China (PBOC) proposed to cancel the regulation on the freezing of pledged bonds in bond repurchase agreements, which is seen as a significant move to enhance market liquidity and deepen the opening-up of the bond market [1][2]. Group 1: Market Liquidity and Depth - The cancellation of the freezing regulation is expected to release liquidity in the bond market, allowing previously frozen high-liquidity bonds to re-enter the secondary market, thus increasing the available trading volume [2][3]. - Currently, the average daily transaction volume of pledged repos in the interbank market is around 50 to 60 trillion yuan, and releasing just 10% of the frozen bonds could inject an additional 10 trillion yuan into the market, enhancing market activity [3]. Group 2: International Integration - The adjustment aligns China's bond market with international practices, particularly the buyout repo model commonly used overseas, which allows pledged bonds to remain tradable [3][4]. - The move is anticipated to lower operational costs and improve convenience for foreign investors, thereby promoting a higher level of openness in the bond market [3][4]. Group 3: Monetary Policy Efficiency - The removal of the freezing requirement provides greater flexibility for the central bank's monetary policy operations, addressing the issue of "no bonds available for purchase" during bond transactions [4]. - This reform is part of a broader strategy to enhance liquidity management, which includes various measures taken by the central bank since May, aiming to create a comprehensive liquidity support system [4].

Core Viewpoint - The proposed cancellation of the freezing requirement for pledged bonds in bond repurchase agreements by the People's Bank of China aims to enhance market liquidity and attract more foreign investment in the domestic bond market [1][2][3] Group 1: Market Dynamics - The current bond market in China, being the second largest globally, requires continuous improvement in trading activity and diversification of participants [1] - The monthly transaction volume of pledged repurchase agreements in the interbank bond market is around 100 trillion yuan this year, indicating a significant amount of short-term interest rate bonds could be "unfrozen," thereby increasing bond supply and enhancing market depth [2] - The removal of the freezing requirement is expected to improve liquidity in the bond market, facilitating foreign institutions' participation in repurchase transactions [1][2] Group 2: Regulatory Changes - The freezing of pledged bonds is primarily a risk management measure to protect lenders, but the necessity for such measures has diminished due to improved regulatory frameworks and reduced default risks in the bond market [1] - The shift towards allowing the reuse of pledged bonds during the repurchase period aligns with practices in mature overseas markets, potentially attracting more foreign investment and enhancing the breadth of the bond market [2][3] Group 3: International Integration - The cancellation of the freezing requirement may lead to a more unified trading framework between onshore and offshore RMB bond markets, promoting a positive cycle between the two and facilitating better integration of the RMB bond market with international standards [3]