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The National Association of Financial Market Institutional Investors (hereinafter referred to as “NAFMII”) has taken action against small and medium-sized financial institutions for two consecutive days.

On August 7, the official website of the Association of Trading Companies announced that Changshu Rural Commercial Bank, Jiangnan Rural Commercial Bank, Kunshan Rural Commercial Bank, and Suzhou Rural Commercial Bank were suspected of manipulating market prices and transferring profits in secondary treasury bond transactions.

On August 8, the NAFMII once again stated that some small and medium-sized financial institutions had violated regulations such as lending bond accounts and transferring interests in treasury bond transactions. The NAFMII has transferred some of the serious violators to the People's Bank of China for administrative penalties.

Since 2023, "big banks lending, small banks buying bonds" has become a hot topic in the market. According to statistics from the fixed income team of Haitong Securities, since the second quarter of this year, rural commercial banks have increased their bond purchases, especially increasing their net purchases of ultra-long-term bonds; at the same time, the central bank has repeatedly warned of the downward risk of long-term treasury bond yields, and is even ready to borrow bonds to sell medium- and long-term treasury bonds, while the prices of 10-year and 30-year treasury bond futures have continued to hit record highs.

Experts warn that we need to learn from the Silicon Valley Bank risk incident and be wary of small and medium-sized banks investing more funds in financial assets. Analysts believe that the current long-term treasury bond market is in a game stage, and the cost-effectiveness of participation may not be high. At the same time, since fixed-income financial products are allocated a large number of bonds, if the bond market volatility is amplified, the income of fixed-income financial products may be affected.