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The recent hot topic of the "small essay" has touched the sensitive nerves of the bond market, triggering hot issues such as whether the central bank should prohibit some small and medium-sized banks from trading treasury bonds, where the bottom of the central bank's consensus range for long-term interest rates is, and how the stress testing of financial institutions' bond asset risk exposure is progressing.

In response to this, Xu Zhong, deputy secretary-general of the China Interbank Market Dealers Association, and others gave a set-the-scenes answer, making it clear that the central bank did not prohibit some small and medium-sized banks from trading in treasury bonds, etc., which temporarily calmed market sentiment.

The "short essay" is just an expression of a phenomenon, which reveals the complex and "dangerous" relationship in the current bond market.

What is currently triggering the new "dangerous relationship" in the bond market is the bond investment advisory business of securities companies. Many securities companies, through on-book investment advisory, product investment advisory and asset entrustment, have evolved into "capital pool"-like businesses, irregular mixed operations, and even abnormal transactions such as counter-trading, proxy holding, market manipulation, account lending, and profit transfer while pursuing business compliance. On August 7, the National Association of Financial Market Institutional Investors issued an announcement to launch a self-discipline investigation into Kunshan Rural Commercial Bank and other four rural commercial banks in Jiangsu for suspected manipulation of market prices and profit transfer in the secondary market of treasury bonds, which clearly revealed this new "dangerous relationship" in the bond market.

The creation of in-account investment consulting, product investment consulting and asset entrustment, etc., are similar to the classification of bond accounts ten years ago. They are all well-intentioned, but have gone astray in actual operations. The reasons behind this deserve careful consideration by all parties.

First of all, it must be clear that it is not enough to continue to enforce the law through administrative law, because behind these illegal market behaviors lies real market demand. As long as the demand exists, the market will evade regulatory identification by changing its disguise, thereby increasing the cost of good market governance.