Mechanism Innovation, Technology Empowerment, Ecosystem Co-construction, and Pioneering Demonstration — Innovative Practices in General Repo: A New Paradigm for Interbank Market Liquidity Management

◆ CZBANK Awarded "Bond Central Clearing Pioneer" by Shanghai Clearing House in October 2025 ◆

Shanghai Clearing House has been advancing the innovation of central counterparty (CCP) clearing mechanisms in the interbank bond market. By optimizing bond netting services and general repo processes while strengthening risk control systems, it has significantly improved market clearing efficiency and security.

As an A-class clearing member of Shanghai Clearing House, CZBANK has actively aligned with market infrastructure reforms, participating in centralized clearing and achieving phased progress. In October 2025, CZBANK ranked second in bond central clearing volume and was honored with the "Bond Central Clearing Pioneer" title.

This achievement stems largely from Shanghai Clearing House’s standardized clearing framework and CCP performance guarantee mechanisms, established over years in bond spot trading, pledged repo, outright repo, and general repo businesses. These mechanisms provide market participants, including CZBANK, with a secure, convenient, and efficient operational support platform.

Through systematic practice in general repo, CZBANK has developed three core insights—"mechanism innovation, technology-driven solutions, and ecosystem co-construction"—not only enhancing its own capabilities but also offering replicable models for market liquidity and risk management.

**01PART. Mechanism Innovation: Unleashing CCP Clearing Efficiency** The smooth operation of general repo heavily relies on Shanghai Clearing House’s CCP mechanism. CZBANK’s deep integration has yielded four breakthroughs:

- **Centralized Risk Management**: Under traditional bilateral credit models, institutions negotiate credit lines individually. The CCP mechanism replaces bilateral exposures with standardized, automated processes. - **Optimized Bond Utilization**: After the expansion of eligible collateral in September 2025, CZBANK promptly included high-quality bonds issued by state-owned enterprises, private firms, and international institutions, broadening liquidity tools and revitalizing holdings. - **Smart Collateral Management**: Shanghai Clearing House’s automated collateral selection, pledging, substitution, marking-to-market, and default handling reduced CZBANK’s internal management burdens and improved efficiency. - **Liquidity & Stability Assurance**: Continuous clearing enabled "T+0" fund recycling, while prioritized netting orders minimized settlement failures during liquidity crunches, setting a benchmark for stable interbank liquidity.

CZBANK’s intraday netting further compressed settlement risks, maintaining market-leading completion rates.

**02PART. Technology Empowerment: End-to-End Automation as a Core Competency** CZBANK treats general repo as a testing ground for "tech + finance," building an intelligent operational system:

- **Front-end Smart Matching**: AI bots on QTRADE and Ideal automate financing strategies and bond trading, integrating pricing, credit control, and collateral management. - **Middle-office Integrated Risk Control**: The FICC digital platform and monitoring systems enable full-process automation from approval to settlement. - **Back-end Data Governance**: Bidirectional data flows with Shanghai Clearing House’s central data pool create closed-loop feedback.

**03PART. Ecosystem Co-construction: Extending Market Value Through Collaboration** CZBANK views general repo as part of market infrastructure co-construction, fostering industry-wide synergy via knowledge sharing. In 2025, it provided end-to-end consulting—from onboarding to risk management—to over 20 small and medium-sized financial institutions, elevating market standardization and efficiency.

Looking ahead, CZBANK will continue leveraging technology and innovation to enhance the interbank bond market’s global competitiveness with "CZBANK Wisdom" and "CZBANK Solutions." Upholding its client-centric philosophy, the bank remains committed to advancing bond central clearing, contributing to a deeper, broader, and more internationally competitive interbank bond market.