Core Viewpoint - The article discusses the rapid growth of the bond lending market in China, highlighting the development of regulations and practices that enhance market efficiency and mechanisms, while also exploring innovative paths for the future of bond lending [1]. Group 1: International Market Overview - The securities lending business originated in the 19th century in the UK and the US, initially as a custodial service to prevent transaction failures [2]. - By the 1970s, the establishment of the US Depository Trust Company (DTC) and the growth of arbitrage trading led to a rapid expansion of securities lending, which became a fundamental mechanism in modern financial markets [2]. - As of the end of 2024, the global securities lending market, including both equity and fixed-income securities, has a total outstanding size of €3.1 trillion, with government bond lending accounting for €1.5 trillion, or 48% of the total [3]. Group 2: Domestic Market Overview - Since its introduction in 2006, China's bond lending business has seen continuous growth in trading volume and market size, driven by economic development and market structure optimization [8]. - As of the end of 2024, the annual settlement volume of China's bond lending business reached ¥38.9 trillion, making it the third-largest trading type after repurchase agreements and cash transactions [9]. - The main participants in the bond lending market are banking financial institutions, with state-owned and joint-stock commercial banks playing significant roles in the early stages, while city commercial banks and securities companies have become key players as the market evolves [10]. Group 3: Business Models and Practices - The international bond lending market primarily features three business models: bilateral bond lending, agency bond lending, and centralized bond lending [15]. - Agency bond lending involves participants using an agent to facilitate transactions, leveraging the agent's client base and information advantages to enhance returns for lenders [15]. - Centralized bond lending pools securities from multiple lenders, allowing for automatic allocation to borrowers based on predetermined parameters, thus improving efficiency [15]. Group 4: Insights and Recommendations - Promoting centralized bond lending is crucial as it enhances risk management, transaction efficiency, and market liquidity, making it easier to implement in the Chinese market compared to agency lending [20]. - The establishment of a high-level infrastructure system is essential for efficient market operation, with a focus on improving transaction and collateral management processes [20]. - There is a need for a diversified bond lending product offering in China to meet various market demands, as the current offerings are relatively limited compared to international markets [20].